New Zealand central bank calls for ‘increased vigilance’ for crypto not regulation

The Reserve Bank of New Zealand (RBNZ) is increasing its monitoring of cryptocurrencies and stablecoins, the country’s central bank said on June 30.

Ian Woolford, Director of Money and Cash at RBNZ, noted in the statement,

“… a regulatory approach isn’t needed right now, but increased vigilance is.”

RBNZ’s move aligns with the responses it received from industry stakeholders on its consultation paper published late last year. Ripple, the blockchain-based payment protocol, and Westpac, one of Australia’s big four banks, were among those who submitted responses to the RBNZ’s consultation paper.

Woolford said the responses reinforced the central bank’s views that cryptocurrencies and stablecoins carry “significant risks” and opportunities. He added,

“We agree that caution is needed, which also reinforces the need for enhanced data and monitoring to build understanding.”

However, the central bank is adopting a wait-and-watch approach when it comes to regulating crypto. Woolford said that effective crypto regulation requires “global harmonization.” And as countries around the globe bring in regulation, “best practices may become clearer.”

In the meantime, the central bank will continue to work with regulatory agencies through the Council of Financial Regulators to “support healthy growth” in the market, Woolford said. He added that RBNZ would also continue discussing emerging crypto issues with industry stakeholders.

Cryptocurrencies are treated as personal property under the current laws in the country and, therefore, are subject to income tax.

The issues raised by cryptocurrencies “do not fall neatly within agency boundaries,” Woolford said. However, issues such as investor protection and regulatory barriers to entry are important to build a “reliable and efficient money and payment system,” he added.

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