An independent review presented to a parliamentary committee encourages the government to nurture the growth of digital asset tech and oversee it in a collaborative manner. As global demand for crypto regulation intensifies and enforcement-based regulation stirs debate, a study for the New Zealand Parliament advises a measured, flexible approach. This 2021 research, titled “Inquiry into the current and future nature, impact, and risks of cryptocurrencies,” was initiated by the New Zealand House of Representatives Finance and Expenditure Committee.
The report, co-authored by a legal partner from MinterEllisonRuddWatts and a commercial law associate professor from the University of Auckland, spans 99 pages. After analyzing public feedback, it provided 22 recommendations. The study expressed a positive stance on digital assets and the overarching blockchain technology. Despite issues like price fluctuations, environmental concerns, and illicit usage, the report warned that heavy-handed regulations could hinder the growth of businesses accepting crypto payments.
The study further advised against premature regulation:
“Crafting and rolling out a comprehensive regulatory structure would be intricate […] To our knowledge, authorities aren’t presently geared to handle this.”
“It’s better to tackle issues as they surface. We urge the government and regulatory bodies to furnish clear and consistent directions on how digital assets fit within existing laws,” the report emphasized. It suggested that before making domestic resolutions, lawmakers can take cues from the regulatory evolution in the US, UK, and Australia.
However, some regulations are inevitable. The report proposes that the Financial Markets Authority establish a novel investment category for digital assets, inclusive of a testing ground. Additionally, a distinct personal property category should be introduced. The formation of a new subcommittee under the Council of Financial Regulators is also advised to offer guidance and a unified approach to “industry-related challenges.”
The report also advocates for the establishment of an expansive task force, including representatives from all pertinent governmental bodies like the police, tax departments, and the central bank, to engage with the digital asset sector. Lastly, the study affirms the importance of ongoing research into central bank digital currencies.