New Zealand recommends increased vigilance but is not exploring crypto regulation.

The Reserve Bank of New Zealand (RBNZ) has announced that it will not propose a regulatory approach towards stablecoins and cryptocurrencies. Instead, it will recommend increased vigilance. Ian Woolford, Director of Money and Cash at RBNZ, stated that issues related to crypto-assets and other innovations do not fit neatly within agency boundaries. However, concerns such as consumer and investor protection and potential commercial or regulatory barriers to entry are important.

The central bank reached this conclusion after receiving 50 submissions from various stakeholders as part of a consultative process that began in December 2022. The submissions were in response to an Issues Paper on Private Innovation, which discussed the development of the crypto-asset market.

The announcement stated that the submissions reinforced the view that there are significant risks and opportunities in the sector, but also significant uncertainties about its future development and the optimal balance. The bank agrees that caution is necessary, which is why it is not proposing a regulatory response at this time.

Although the focus of the process was on the potential uses of crypto-assets as money, the RBNZ also expressed its latest position on central bank digital currency (CBDC). It stated that while it is exploring the possibility of a CBDC, no decision has been made regarding its necessity. If a CBDC is introduced, it would not replace cash, which would still be available.

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New Zealand has seen Binance register as a financial service provider, but Huobi has ended derivatives trading services in the country.

Edited by Parikshit Mishra.

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