New Zealand Prioritizing Strict Monitoring of Crypto & Stablecoins

The Reserve Bank of New Zealand (RBNZ) made its stance clear on the regulatory approach towards crypto and stablecoins. The RBNZ acknowledged the significant risks and opportunities that arise from stablecoins and other private money innovations in a statement released Friday.

The concerns come days after a New Zealand-based travel company revealed losing $2 million to crypto trades.

RBNZ’s Take on Crypto and Stablecoins

Ian Woolford, Director of Money and Cash, Tari Moni Whai Take, released a summary of submissions for the earlier issues paper around the future of money. The official noted that crypto innovations present both significant risks and opportunities.

Woolford also underlined a considerable uncertainty surrounding how the sector will evolve. Although, the official hinted at an optimal balance between innovation and regulation alongside that evolution.

The statement comes soon after We Are Bamboo, an ethical travel company based in New Zealand, reportedly utilized customer funds for crypto trading. The money intended for prepaid trips was traded across multiple platforms, losing $2 million.

Woolford said,

“We also agree that global harmonisation is crucial to ensure effective regulation. As overseas regimes are implemented, best practice may become clearer.”

The RBNZ concurs that while a regulatory approach might not be necessary at present, increased vigilance is crucial.

Balanced Approach to Crypto

One of the key takeaways from the submissions is the necessity for enhanced data and monitoring to build a comprehensive understanding of private money. The RBNZ advocates for the alignment of regulatory approaches across agencies and jurisdictions.

Woolford added,

“We will continue to work with other agencies, particularly through the Council of Financial Regulators, to support healthy growth in the financial ecosystem, as well as continuing to engage with industry and other stakeholders on the issues as they arise.”

The RBNZ’s statement underscores caution that the global regulatory regime is shifting globally. The US has been at the center of enforcement actions against crypto businesses.

American businessman Mark Cuban recently advocated for simplicity around a framework that could supervise the virtual asset class.  

Meanwhile, New Zealand has implemented stricter regulations focusing on FATF’s AML measures and KYC norms. While the aim is to prevent illicit activities and protect consumers, present rules haven’t contributed to long-term stability and legitimacy in the crypto market in many jurisdictions.