Can New Zealand Become A Crypto Hub? Minister Proposes Industry Support

Tuesday, 21 May 2024, 8:18 am
Press Release: Hugh Grant

Cryptocurrency and blockchain have been a major topic of discussion in the town for many years. However, most countries haven’t been able to adopt this innovative technology to date. The research says that around 58 countries around the world have recognized the importance of digital assets and blockchain and have accepted this modern technology.

New Zealand is one of the countries that have legalized the buying and selling of cryptocurrencies while making major reforms to its regulation. However, no matter how technologically neutral this country has become, it is still not a legal tender here.

With such restrictions, the country can’t actively participate in the maturation of the digital asset sector. Minister of Commerce Andrew Bayly, while raising his concerns on New Zealand’s “wait and see” approach, proposed an amazing solution to support industry growth. Would the “wait and see” (laidback) behavior work in the global standing? What is stopping New Zealand from contributing to the digital asset industry?

Challenges To New Zealand Becoming A Crypto Hub

The crypto market is not new; it has existed for many years. New Zealand has shown interest in this industry. However, its aspiration of becoming a crypto hub faces several challenges that prevent the country from being a major contributor to this industry.

Skepticism from the Central Bank

Central banks have been regulating traditional currencies, but this time these banks have to handle cryptocurrencies that need regulatory frameworks to be built from scratch. The regulatory body here is the Reserve Bank Of New Zealand (RBNZ) and its Governor Adrian Orr has expressed reservations about cryptocurrencies, questioning their stability and value as a form of currency.

The Governor has also shown skepticism towards Central Bank Digital Currencies (CBDCs), a potential future development in the digital asset structure. The central bank's stance creates uncertainty for businesses and investors considering entering the New Zealand crypto market.

Need for Coordinated Global Regulation

The current regulatory environment surrounding cryptocurrencies is fragmented. There are different countries with varying approaches, creating complexness for businesses working internationally.

New Zealand, lacking a clear and comprehensive regulatory framework, might struggle to attract major crypto players who seek a more predictable and stable environment. Therefore, the country needs a coordinated global approach to regulate cryptocurrency, but it is not as easy as it sounds to achieve. It will require international cooperation.

The Shortage Of Skills

The digital asset industry, or let alone blockchain, is a technology that keeps changing with new developments. How will the current workforce fulfill this demand? There will always be a constant need for highly skilled but adaptive professionals who will adapt to continuous changes and keep on learning. New Zealand might face a shortage of talent in areas like blockchain development, cryptography, and cybersecurity. This lack of skilled workforce could hinder the growth of the domestic crypto industry and limit its ability to compete with established hubs that boast a more developed talent pool.

Andrew Bayly Proposes Some Measures

Minister Bayly has analyzed New Zealand’s standing in the global cryptocurrency market and understood the potential of this market for the economy. The Minister has proposed a multi-dimensional approach to cater to the supposed crypto hub in New Zealand. How is this possible?

#1. Evidence-based Approach to Crypto Regulation

What does that mean? The Minister advocates for a regulatory structure that is based on practical evidence and a clear understanding of the global and commercialized crypto sector. This approach will give a way to promote new technology while eliminating the risks.

Regulations would focus on protecting consumers from fraud and scams, ensuring AML compliance, and promoting responsible business practices within the industry. By taking a data-driven approach, New Zealand can establish a regulatory environment that encourages growth without suppressing innovation.

#2. Policies to Encourage Innovation and Collaboration

Minister Bayly proposes initiatives to create an environment that encourages collaboration between the government and the crypto industry. This could involve:

Regulatory Sandboxes - This means creating designated zones where businesses can test innovative crypto products and services in a controlled environment with relaxed regulations.

Necessary Grants - This will offer financial support to startups and research institutions developing cutting-edge blockchain technologies.

Industry Forums - This will facilitate regular dialogue and knowledge exchange between government officials, industry leaders, and academics to stay abreast of emerging trends and develop collaborative solutions.

#3. Immigration Policies to Address Skill Shortages

To address the potential talent gap, Minister Bayly suggests revisiting immigration policies to attract skilled professionals in the digital asset and blockchain sector. For example:

• Creating expedited visa pathways for qualified blockchain developers, crypto security specialists, and other in-demand professionals.
• Developing targeted campaigns to attract skilled individuals from overseas crypto hubs, highlighting the benefits of working in New Zealand's growing crypto industry.

# 4. Educational Resources and Training Programs

Minister Bayly emphasizes the importance of upskilling the existing workforce and educating the general public about digital assets and blockchain technology. The state will be offering specialized courses in blockchain development, cryptography, and smart contracts to equip individuals with the necessary skills to participate in the crypto economy via investing through platforms like Bitcoin Pro Air in New Zealand.

The state will further encourage universities to develop educational programs on blockchain technology and integrate crypto-related topics into existing business and technology curriculums. Also, initiatives should be launched to educate the general public on the basics of cryptocurrencies and blockchain, promoting responsible investment practices and mitigating potential risks.

# 5. Exploring Tax Incentives and AML Provisions

Minister Bayly recognizes the need to find a balance between attracting investment and preventing illegal activities. Investigating potential tax benefits for businesses operating in the crypto sector while ensuring transparency and compliance with international tax regulations.

On the other hand, robust AML frameworks should be developed to prevent the misuse of cryptocurrencies for illicit activities. This can involve collaborating with financial institutions and industry players to implement effective AML compliance measures.

Final Thoughts

New Zealand finds itself at a crossroads with the crypto industry. While the "wait and see" approach has ensured caution, it risks missing out on potential benefits. Minister Bayly's proposal for an evidence-based approach to regulation, coupled with measures to foster innovation, address skill shortages, and educate the public, presents a promising path forward.

New Zealand has natural resources and a forward-thinking government that will make it a crypto hub. However, overcoming skepticism from the central bank and achieving coordinated global regulation remain challenges.

Despite these uncertainties, New Zealand's proactive approach positions it properly to generate revenue on the chances given by the changing cryptocurrencies and blockchain sector.

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