New Zealand ‘lagging behind’ on crypto-friendliness

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First published SEPTEMBER 9, 2021Updated 3 hours ago

Anuja Nadkarni

Anuja Nadkarni is an economic journalist covering immigration, small business, employment and private higher education.

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A select committee began its review of hundreds of submissions on the current and future nature, impact and risks of cryptocurrencies

This week, El Salvador became the first country to officially use bitcoin as legal tender. The Republic of Central America bought 400 bitcoins (NZ $ 29 million) at the time, and another 150 on Wednesday.

Bell Gully’s crypto-asset expert Special Counsel Campbell Pentney said crypto-assets and the diverse use of blockchain technology are now mainstream and New Zealand is ” lagging behind crypto-friendly countries “like El Salvador, Singapore, Switzerland and Germany.

But were making progress.

On Wednesday, the finance and spending committee heard from some industry experts who provided comments to the select committee’s inquiry into understanding the current and future nature, impact and risks of cryptocurrencies. .

The bids were closed last week and MPs had started to look at the 266 bids.

Pentney said the investigation was a good chance to get the right regulatory law.

We don’t want to have bad settings where we end up hampering technology and innovation.

The growth of cryptocurrency and the number of people participating in it as an investment or otherwise has certainly increased since it became mainstream around four years ago.

Pentney said that over the past year, the rise of non-fungible tokens (NFTs) has shown how quickly the industry is changing.

When an industry is growing this fast, you have little time to really shape the laws and regulations because if you wait too long it kind of gets out of hand. And it can be difficult to put genius back in the bottle.

But Pentney said there was a misconception that the cryptocurrency and blockchain industry was unregulated.

If you have a cryptocurrency exchange, or if you are a cryptocurrency investor, you are still subject to all existing laws that cover securities, money laundering, and taxation. It’s just that there is no specific law for crypto.

So, when not specifically designed for cryptocurrency, it is often quite difficult to understand how the rules apply. And it’s kind of a square peg in a round hole type problem.

It is an asset class worth US $ 2 trillion and in New Zealand it is no longer a niche or marginal industry. Jonty Kelt, Faintail Ventures

The Inland Revenue has updated its guidelines to improve the application of ordinary tax rules to cryptoassets.

On Wednesday, in its draft amendments, the IRD bill included the exclusion of crypto-assets (not NFTs) from the GST and the financial arrangement rules to ensure that these rules do not impose barriers. new product development, capital raising and investment via crypto-assets.

During the select committee briefing, veteran venture capitalist and founder of Fantail Ventures Jonty Kelt said about 25% of New Zealanders have invested in cryptoassets.

It is an asset class worth US $ 2 trillion and in New Zealand it is no longer a niche or marginal industry.

The inquiry of the select committees also aimed to examine the environmental impact of mining cryptocurrencies like bitcoin.

But Pentney said the industry was moving quickly towards using renewable energy after Tesla chief executive Elon Musk said it would reconsider accepting bitcoin payments once miners use 50 % renewable energy.

After Musk’s tweet, the value of Bitcoins fell by 30%.

Pentey said the volatility of cryptocurrencies and cryptoassets that were not tied to fiat currencies was a top concern for investors.

The market tends to focus on the flavor of the month, it’s NFTs at the moment, but last year we had dogecoin, and before that, Game Stop. It’s not really predictable. Then there are concerns about losing your wallet key.

A 2000 Financial Services Council survey found earlier this year that one in five invests or has ever invested in cryptocurrencies, an increase of around 7% from March of last year.

But men were three times more likely than women to use cryptocurrency.

Reserve Bank of New Zealand Te Ptea Matua also consulted this year to create a central bank digital currency.

China has created its digital yuan but it does not use a blockchain and even Facebook is planning to launch diem, a digital coin it had backed this year.

Pentney said it was a positive sign that the government is interested in the crypto-asset space.

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