The NZ government has responded to a 112-page parliamentary select committee cryptocurrency booster report with a three-pager – including one title page.
In a response handed down last week, the government says it “wishes to support growth in the digital assets industry and will continue to proactively consider the recommendations in the report”.
While acknowledging the “considerable benefits of digital assets and related technologies for greater competition and innovation in financial services and the wider economy”, the official reply highlights the downsides.
According to the government response, there are “evolving risks to markets and investors from digital assets, and cryptocurrency has been an enabler of ransomware and some other transnational crime and scams”.
“The Government is actively monitoring international developments around the treatment of digital assets and will continue to consider appropriate policy settings to manage these risks,” the note says. “In particular, the Government notes recent recommendations from the International Organization of Securities Commissions and Financial Action Task Force on the regulation of digital assets related to securities and anti-money laundering/counter-financing of terrorism laws.”
Published last August, the Finance and Expenditure Committee report – essentially a rubber stamp of a third-party analysis independent legal advisers Jeremy Muir, MinterEllisonRuddWatts partner, and Alexandra Sims, University of Auckland associate professor in commercial law – includes 22 recommendations to foster growth in the nascent digital asset sector in NZ.
Among other points, the report urges the government to “add a defined class of digital assets which are used for investment purposes as a new category of ‘financial advice product’ (but not, to be clear, a new ‘financial product’)”.
The response notes a number of government digital asset-related workstreams are already underway with agencies including the Reserve Bank, the Ministry of Justice, the Inland Revenue Department and the Financial Markets Authority.
Overall, the FEC, chaired at the time by Labour MP Ingrid Leary, says in the report that the government needs to adopt a more ‘proactive’ stance on digital asset regulation and promoting the “exciting future” of the financial technology.
“If the current ‘wait and see’ approach remains, New Zealand risks missing out,” the select committee notes.
In reply the government says it “will continue to consider matters raised by the Committee and continue to monitor international market developments”.
The official response comes amid another boom in cryptocurrency markets, with bitcoin testing historical highs, as well as a few Australasian regulatory actions against bit players. For example, the Australian Securities and Investments Commission won a seminal court case last month against Block Earner for carrying out unlicensed financial services while the regulator is also pursuing the founders of collapsed crypto business, Blockchain Global.
Meanwhile, the NZ Serious Fraud Office launched an investigation into the now-liquidated crypto exchange, Dasset (a company mentioned in the FEC associated report), regarding $6.3 million of missing client money.