In a recent statement, the Reserve Bank of New Zealand (RBNZ) announced its decision to enhance monitoring of stablecoins and crypto-assets. However, the central bank stopped short of advocating for immediate regulatory intervention. Ian Woolford, the RBNZ’s director of money and cash, acknowledged that while a regulatory approach may not be necessary at present, increased vigilance is warranted.
The RBNZ’s decision comes after reviewing 50 stakeholder submissions, including those from industry players such as BlockchainNZ, Ripple, Westpac, and the Bank of New Zealand. These submissions highlighted both the significant risks and opportunities associated with cryptocurrencies, along with uncertainties regarding their development. Recognizing the need for caution, Woolford emphasized the importance of gathering enhanced data and monitoring to improve understanding within the financial system.
Rather than hastily implementing regulations, the RBNZ appears to be observing how other jurisdictions handle crypto regulation before making its own moves. Woolford stressed the importance of global harmonization to ensure effective regulation. He also noted that as overseas regimes are implemented, best practices may become clearer for New Zealand to adopt.
New Zealand’s current laws consider cryptocurrency as a form of property. Digital assets are subject to existing non-crypto-specific financial, anti-money laundering, and tax regulations. Woolford acknowledged the challenges posed by cryptoassets and other innovations, stating that these issues do not neatly fit within existing agency boundaries. He further emphasized the necessity of protecting consumers and investors, as well as addressing regulatory barriers, to establish a reliable and efficient money and payment system.
In the 2022 Global Crypto Adoption Index published by Chainalysis, New Zealand ranked 108 out of 146 countries in terms of grassroots cryptocurrency adoption. While the country recognizes the importance of monitoring and addressing the risks associated with crypto, it aims to strike a balance between regulation and fostering innovation in the industry.
By actively monitoring stablecoins and cryptocurrencies, the RBNZ aims to maintain a comprehensive understanding of potential risks and opportunities. While refraining from immediate regulatory measures, New Zealand seeks to learn from global experiences before implementing its own framework. This approach reflects the country’s commitment to ensuring effective regulation while supporting the development of a robust financial ecosystem.