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New Zealand Risks Falling Behind in Crypto Innovation with Cautious Stance

New Zealand debates its cryptocurrency strategy amid fears of lagging in global digital asset innovation.

Thu, 11 Apr 2024, 09:50 am UTC

Commerce and Consumer Affairs Minister Andrew Bayly warns that New Zealand's "wait and see" approach to cryptocurrency may hinder its potential to benefit from the burgeoning digital asset sector. With the global race in blockchain innovation accelerating, New Zealand risks missing out on significant opportunities.

New Zealand Urged to Embrace Crypto Wave with Policy Overhaul and Industry Collaboration

In a recent report by Cointelegraph, the New Zealand ministry tasked with shaping the country's economic strategy has proposed taking a more accommodating stance toward cryptocurrency innovations. The ministry issued several recommendations to promote the growth of digital assets in the country.

Andrew Bayly, New Zealand's minister of commerce and consumer affairs, suggested revamping the country's sluggish approach to experimenting with and adopting digital assets and blockchain technology innovations. He urged the government to encourage the cryptocurrency industry's growth and consider appropriate policies to manage associated risks.

In response to the parliamentary Finance and Expenditure Committee's inquiries into cryptocurrencies, Bayly's office stated, "The current 'wait and see' approach could risk New Zealand missing out on the benefits of development in the digital asset industry."

The ministry's advisers made eight key recommendations to help New Zealand get back on the global crypto wave. The recommendations include enacting policies and regulations to encourage digital asset and blockchain development, facilitating greater collaboration between government and industry players, and addressing digital asset and blockchain skill shortages through immigration.

New Zealand Debates Future of Crypto: Balancing Innovation with Stability and Regulation

Other recommendations for crypto-friendly approaches included developing training and educational resources, tax incentives, anti-money laundering provisions, and continuing design work on an in-house central bank digital currency (CBDC).

Bayly stated that most of the recommendations are long-term, emphasizing the need for a coordinated global regulatory approach and supervisory frameworks for digital and crypto assets.

Bayly's proposal for an in-house CBDC contradicts the views of Reserve Bank of New Zealand Governor Adrian Orr. On February 12, Orr told a parliamentary finance committee that CBDCs are not a valid substitute for fiat money and "are not stable."

When asked about the Reserve Bank of New Zealand's concerns about cryptocurrencies, Orr stated that Bitcoin is not a means of exchange, a store of value, or a unit of account.

"Likewise stablecoins, I think, are the biggest misnomers [...] Stablecoins are not stable. They are only as good as the balance sheet of the person offering that stablecoin," he added.

"The number one thing we can do is be as transparent and blunt as we can. They are speculative coins, not currency and not central bank cash," he concluded.

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