Stakeholders in New Zealand are calling for a slow-and-steady approach toward policing the industry.
The latest push for a measured approach to regulating digital assets comes from a report from the Finance and Expenditure Committee of the New Zealand House of Representatives. Commissioned in 2021, the report focuses on the impact and risks of using digital assets in New Zealand’s payment system.
The 99-page report stated that while digital assets are susceptible to security breaches and extreme volatility, the asset class still offers a range of benefits. It noted that using blockchain technology enhances transparency and efficiency in the payment system as it warns against hasty regulations.
Its authors posit that stringent digital currency regulations come with the flaws of stifling innovation in the ecosystems that could adversely affect payments in the country.
The committee said that New Zealand government agencies need the necessary technical tools to roll out a comprehensive regulatory framework. It advised against speedy legislation for digital currencies, saying that blockchain and digital assets are still in the early stages of their development.
“Creating and implementing an integrated framework would be a complicated endeavor,” the report read. “Based on our understanding, agencies are not resourced or equipped to manage this.”
In place of legislation, a step-by-step process for policing digital assets is being recommended, with regulators addressing challenges as they arise. Co-authored by a University of Auckland associate professor of commercial law, the report suggested that the layered rules should be consistent and in line with existing digital asset rules.
“We recommend that the Government adopt a technologically neutral approach to regulation of the digital asset space, tailoring measures in relation to digital assets and related services and technology as required to deal with material risks associated with them,” it read.
In July, the Reserve Bank of New Zealand (RBNZ) confirmed that it would increase its ecosystem monitoring rather than adopting a full regulatory approach.
Going against the grain
New Zealand’s stance on digital currency regulations is far from the hurried approach adopted in other jurisdictions.
European regulators took the initiative with the launch of its Markets in Crypto Assets (MiCA) rules, while other regions are inching forward with the proposed launch of their own digital asset rules.
Led by India, G20 nations are adopting a global outlook for their digital currency regulatory ambitions, while the UAE and Hong Kong have rolled out comprehensive industry regulations. International regulators are cracking down on digital currency promotions that violate minimum standards and service providers operating without prior regulations.
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