The Reserve Bank says it is not yet proposing regulation, but is ramping up its monitoring of stablecoins and cryptoassets (cryptocurrencies), suggesting there could be “real benefits to harmonizing cryptoasset regulation globally.”
The comments come as the central bank releases a comment to consultation in its ongoing future of money project. It sought feedback on its approach to the opportunities and challenges of new forms of private money, such as cryptoassets, including stablecoins.
“The submissions reinforced our view that there are significant risks and opportunities, but also great uncertainties about how the industry will develop and where the optimal balance will lie. We agree with the view that caution is warranted, so we are not proposing for a regulatory response on this point,” the RBNZ said.
“Another reason for a cautious approach lies in global regulatory developments. Harmonizing the regulation of crypto assets is likely to yield real benefits. As different overseas regimes are implemented, best practices for regulating crypto assets become clearer. This will guide our optimal regulatory design and assessment of the need for alignment.”
“More immediately, we plan to strengthen our monitoring capability in a more systemic, robust manner. Currently, our data is limited and varies in quality, limiting our ability to assess potential issues and then respond in a timely and effective manner,” said the explanation. Reserve bank says.
“Monitoring global regulatory developments, particularly in similar jurisdictions and with key global organizations such as the Bank for International Settlements, will be an integral part of the monitoring framework. We need to establish an inter- agency approach The Reserve Bank is already working with other CoFR [Council of Financial Regulators] agencies to identify gaps in data and statistics. Building on this work, we propose a phased process to increase our capacity.”
The Reserve Bank says issues raised by crypto assets and other innovations don’t fall neatly within the agency’s existing boundaries.
“Issues such as consumer and investor protection, or perceived regulatory barriers to entry, may impact the collective vision we have for a reliable and efficient money and payment system that better meets the changing needs of New Zealanders. issues also matter because how we respond now may determine how they evolve from, say, their current uses to new forms of money,” says the Reserve Bank.
Friday’s update from the Reserve Bank will follow said in December it was establishing a “monitoring framework” to track and assess developments in new forms of “private money”, including cryptoassets. The Reserve Bank does extensive work as part of her Future of Money program. This includes work on the potential development of a central bank digital currency (CBDC)that is still on.
A CBDC is the digital form of a country’s fiat currency. That means that a Reserve Bank-issued CBDC, like the physical NZ dollar, would be a Reserve Bank liability, essentially backed by trust in the government and its institutions. By law, the Reserve Bank is the sole supplier of NZ notes and coins, and this is an important raison d’être for the central bank.
Parliament’s Finance and Expenditure Select Committee conducted a 2021 survey of cryptocurrencies. It promised to report to the House but have yet to do that.
In his coercion to the Select Committee, the Financial Markets Authority (FMA), which regulates NZ’s financial markets, pointed out that it does not regulate cryptocurrencies. However, some cryptocurrency activities may fall within the regulatory purview of the FMA.
The RBNZ definitions of cryptoassets and stablecoins are below.
What are Crypto Assets?
A cryptoasset is a digital token that relies on cryptographic methods and non-traditional payment infrastructure to be traded and stored.
What are stablecoins?
A stablecoin is a type of crypto asset that aims to stabilize its value against other conventional assets, including central bank money.