In the midst of escalating calls for cryptocurrency regulation across the globe and the ongoing debate surrounding enforcement-based approaches, a recently issued report to the New Zealand Parliament advocates for a measured and adaptable strategy.
Initiated by the Finance and Expenditure Committee of the New Zealand House of Representatives in 2021, this comprehensive report titled “Exploration of Cryptocurrency: Current State, Future Prospects, and Potential Risks” emphasizes the importance of a gradual and flexible regulatory stance.
Jointly authored by a legal expert from MinterEllisonRuddWatts law firm and an associate professor of commercial law at the University of Auckland, this 99-page document meticulously reviewed public opinions gathered earlier and offers 22 prudent recommendations.
Overall, the report displayed a positive perspective on blockchain technology and digital assets.
While acknowledging persistent challenges such as price volatility, environmental concerns, and illicit activities, the report discouraged the imposition of overly stringent limitations, contending that such restrictions could impede the viability and competitive edge of businesses that increasingly embrace cryptocurrency payments.
The report also cautioned against a preemptive regulatory push:
“Developing and instituting a comprehensive regulatory framework would be an intricate endeavor. […] Based on our assessment, regulatory bodies lack the necessary resources and infrastructure for effective management.”
“Instead, we propose that issues be tackled as they surface.
“Our suggestion is for the Government and regulators to establish consistent and coherent guidelines pertaining to the treatment of digital assets within existing legal frameworks,” the report emphasized.
It further advised local legislators to monitor regulatory advancements in the United States, United Kingdom, and Australia before devising domestic policies.
Certain regulatory interventions are deemed essential.
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The report urges the Financial Markets Authority (FMA) to introduce a novel investment category tailored for digital assets, incorporating a sandbox provision, alongside a distinct category for personal property.
Furthermore, the report advocates for the FMA to spearhead a dedicated subcommittee within the Council of Financial Regulators, tasked with furnishing expert counsel and a synchronized approach to address industry-related challenges.
Concurrently, a more comprehensive task force, encompassing representatives from pertinent government entities including law enforcement, tax authorities, and the central bank, should be convened to engage with the digital asset sector.
The report concluded by underscoring the need to sustain research into central bank digital currencies.
In a landscape where the cacophony for cryptocurrency regulations is crescendoing, the New Zealand report stands out as a call for prudent and adaptable action, promoting a harmonious equilibrium between innovation and oversight.
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