Cryptocurrencies, in particular bitcoin, have captured the public’s attention. It is hard to find a
person who has not heard about Bitcoin, albeit blockchain, the technology that the creators of
Bitcoin devised, is still a mystery to most.
Cryptocurrencies allow people to transfer value in seconds if using a newer cryptocurrency than bitcoin between themselves even if they are on opposite sides of the world without using third parties: something which conventional banking systems cannot do.
Conventional payment systems have not caught up with the internet age. We take it for granted that we can send digital files, such as photographs and documents, across the world in seconds. Moreover, the use of cryptocurrencies goes well beyond mere transfers of value; it can transform
how we transact. The provision of goods and services, including the transfer of legal title and the payment can be done in one transaction.
Fears of the dangers of technology are understandable, such as the ability for criminals to use cryptocurrencies to launder money and finance terror; however, any technology can be used for good and bad. If early humans had turned their backs on fire due to the very real risk of harm, none of us would be reading this report. Indeed, criminals are using the current banking and corporate/trust systems more than cryptocurrencies.
The Reserve Bank of New Zealand said Friday it is ramping up its monitoring of Stablecoins and crypto assets in response to public concerns over their potential impact on the financial system and monetary sovereignty. “A regulatory approach isn’t needed right now, but increased vigilance is,” said Ian Woolford, director of money and cash at the RBNZ.
“There are significant risks and opportunities from Stablecoins and other private money innovations, but also significant uncertainties about how the sector will develop and where the optimal balance will lie,” he added. Global policy harmonization around the issues is crucial to ensure effective regulation. As overseas regulatory regimes are implemented, best practices may become more evident, Woolford said.
Woolfords’ statement was accompanied by a summary of 50 stakeholder submissions to an earlier RBNZ paper discussing crypto and decentralized finance. Respondents included the country’s crypto advocacy body BlockchainNZ, technology company Ripple, and banks such as Westpac and Bank of New Zealand. Further, he said the submissions showed that crypto presented significant risks and opportunities, as well as uncertainties in the development of the sectors, which earned him additional attention.
Current New Zealand laws consider cryptography a form of property. Digital assets are governed by various non-crypto-specific financial, anti-money laundering, and tax regulations that generally apply.