The cry for crypto regulation is becoming increasingly louder worldwide, but a report prepared for the New Zealand Parliament suggests a slow and agile approach rather than rushing into comprehensive regulations. The report, titled “Inquiry into the current and future nature, impact, and risks of cryptocurrencies,” was commissioned by the Finance and Expenditure Committee of the New Zealand House of Representatives in 2021.
Written by a partner at the law firm MinterEllisonRuddWatts and a University of Auckland associate professor of commercial law, the 99-page report carefully considered previously solicited public comments and offered 22 recommendations. Overall, it held a favorable view of digital assets and blockchain technology.
Despite acknowledging challenges such as volatility, environmental impact, and criminal usage, the report cautioned against imposing excessive restrictions, as this could potentially reduce the viability and competitiveness of businesses that accept cryptocurrency payments. The report argued that creating and implementing an integrated regulatory framework would be a complex endeavor, pointing out that government agencies are not currently sufficiently resourced or equipped to manage such a task.
Instead of rushing into regulations, the report recommended addressing problems as they arise and creating coherent and consistent guidance on the treatment of digital assets under current law. The report suggested that the New Zealand government and regulators should observe the regulatory progress in the United States, United Kingdom, and Australia before making any local decisions.
Related Post
However, the report also acknowledged that certain regulatory measures are inevitable. It recommended that the Financial Markets Authority (FMA) establish a new class of investment for digital assets that includes a sandbox for innovation and a new class of personal property. Additionally, the report proposed that the FMA lead a new Council of Financial Regulators subcommittee to provide advice and a coordinated response to industry issues.
To ensure collaboration and effective regulation, the report suggested forming a larger working group consisting of representatives from all government agencies involved, including the police, tax authorities, and the central bank. This working group would collaborate with the digital asset industry to address issues collectively.
Furthermore, the report emphasized the need for continued research into central bank digital currencies (CBDCs). This aligns with global trends, as multiple countries are exploring the potential of CBDCs as a digital form of fiat currency.
By recommending a cautious and measured approach to regulation, the New Zealand report acknowledges the evolving nature of digital assets and blockchain technology. It recognizes the need for appropriate oversight while also highlighting the importance of allowing the industry to grow and innovate.
As the report concludes, it’s clear that the New Zealand government and regulatory agencies must proceed carefully and avoid rushing into a fully integrated and consistent regulatory framework for digital assets. Instead, they should learn from the experiences of other countries and adapt regulations as necessary to promote responsible development and adoption of cryptocurrencies in New Zealand.
In summary, the report highlights the importance of striking a balance between regulation and innovation in the cryptocurrency space. It acknowledges the potential of digital assets and blockchain technology while urging caution in implementing regulations. By taking a slow and agile approach, New Zealand aims to foster a competitive and favorable environment for digital asset businesses while ensuring necessary oversight and protection for consumers.
