The Reserve Bank of New Zealand (RBNZ) has clarified its stance on the regulatory approach to crypto and stablecoins. The Reserve Bank of New Zealand acknowledged the significant risks and opportunities that arise from stablecoins and other private money innovations in a statement on Friday.
The concerns come days after a New Zealand-based travel company disclosed a loss of $2 million in cryptocurrency trading.
The RBNZ’s take on cryptocurrencies and stablecoins
Ian Woolford, Director, Money & Cash, Tari Moni Whai Take, released Summary of Submissions for Previous Issues Paper on The Future of Money. The official noted that cryptographic innovations present significant risks and opportunities.
Woolford also emphasized a great deal of uncertainty surrounding how the sector will evolve. Although the official hinted at a perfect balance between innovation and organization along with this development.
The statement comes shortly after We Are Bamboo, an ethical travel company based in New Zealand, used customer funds to trade cryptocurrencies. The money for the pre-paid trips circulated across multiple platforms, resulting in a loss of $2 million.
We also agree that global coordination is critical to ensuring effective regulation. As external systems are implemented, best practices may become clearer.”
The RBNZ agrees that while a regulatory approach may not be necessary at the moment, increased vigilance is critical.
Balanced approach to coding
A key takeaway from the submissions is the need for better data and monitoring to build a comprehensive understanding of private finance. The RBNZ advocates harmonization of regulatory approaches across agencies and jurisdictions.
“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 continue to engage with the industry and other stakeholders on issues as they arise.”
The RBNZ statement reiterates caution that the global regulatory regime is changing globally. The United States has been at the center of enforcement action against crypto companies.
US entrepreneur Mark Cuban recently called for simplification around a framework that can oversee a virtual asset class.
Meanwhile, New Zealand has implemented stricter regulations focusing on the Financial Action Task Force’s anti-money laundering procedures and “know your customer” standards. While the goal is to prevent illegal activities and protect consumers, the existing rules have not contributed to the long-term stability and legality of the crypto market in many jurisdictions.
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