Distributed Ledger Technology (DLT) is a new development in computer science. It enables transparency and trust through immutability and visibility as recorded data can be retrieved online. Furthermore, it can eliminate the need for a third party and can potentially alter the current relationships held between people, businesses and governments. In New Zealand, the opportunities are abundant. Cryptocurrencies and Blockchain technology are generally well-received in the sovereign island country.
In this article, we will explore the general outlook of cryptocurrencies and blockchain technology in New Zealand.
Support from New Zealand Government and Authorities
A report from Callaghan Innovation, NZ's innovation agency, shows immense support from the New Zealand government. They recognize the potential benefits of blockchain and distributed ledger technologies for businesses looking to stay at ahead in the industry. Despite the apparent challenges brought forth from emerging technologies, it is encouraging to see businesses attaining support from the government to explore innovative opportunities.
Reaction to Hacks
In recent months, New Zealand-based Crypto exchange Cryptopia is drawing much attention to itself. The digital asset exchange has revealed that it has suffered significant losses from a hack that occurred in January. An analysis published by Cointelegraph suggests that $16 Million in Crypto was stolen during the hack. The support provided by the government agencies and authorities was very encouraging. The New Zealand Police and High Tech Crimes Unit classified it as a major crime and has opened an official investigation. Such support from the government can serve as an indication of how positive they see cryptocurrencies and blockchain technology.
The company had suspended trading as soon as they detected a major hack. However, the Crypto exchange has resumed trading on 40 trade pairs earlier today, according to Cointelegraph and Cryptopia's tweet.
New Zealand Crypto Regulation
Financial Markets Authority (FMA) in New Zealand stated that companies providing financial service related to cryptocurrencies need to comply with the 'fair dealing' requirements in the Financial Markets Conduct Act 2013. These prohibit you from engaging in misleading conduct or making deceptive or unsubstantiated statements. For more information, please refer to their official page.
An article from Bitprime provides an indication of the current state of Crypto Regulation in New Zealand. While there is no crypto-specific regulatory legislation, there are existing laws that Crypto can be identified with. The Inland Revenue Department (NZ's version of IRS) considers Cryptocurrencies as property and should be taxed accordingly.
The article also gave 10 recommendations to Crypto Regulations in NZ:
- The New Zealand Government should continue to allow cryptocurrencies to be traded as well as used for the payment of goods and services within and outside New Zealand
- New Zealand-based cryptocurrency exchanges should be encouraged, and clear guidance provided as to their Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT) obligations by both the Department of Internal Affairs (DIA) and the Financial Markets Authority (FMA). That is, follow Australia’s example
- Greater advice and therefore protection should be provided to consumers on cryptocurrencies by the FMA, DIA and other organizations
- Cryptocurrency exchanges that comply with AML/CFT and other requirements must have access to bank accounts with New Zealand banks
- Merchants must be able to accept cryptocurrency payments by people or organizations for under NZD100 or payments made through a New Zealand exchange (or an overseas exchange) that complies with AML/CFT requirements, without the merchants losing their bank accounts
- GST is removed from cryptocurrencies that are used for the payment of goods and services
- The Inland Revenue Department (IRD) clarifies other taxation rules around the use of cryptocurrencies.
- The IRD should accept cryptocurrencies for the payment of taxes.
- The Reserve Bank of New Zealand (RBNZ) should trial the creation and issuance of a New Zealand Central Bank-issued Digital Currency (CBDC)
- Although this point goes wider than mere cryptocurrencies. New Zealand should follow countries such as the United Kingdom (UK) and Australia and create a regulatory sandbox and ensure that the regulators work alongside fintech companies
Examples of Blockchain and Crypto Adoption in New Zealand
- The Next Web reported that a New Zealand bank has used blockchain to send meat to South Korea. ASB, a subsidiary of Australia’s Commonwealth Bank claims that it is the first in NZ's export history. The NZ meat exporter Greenlea Premier Meats conducted the meat trade with a large Korean importer. The bank also plans to use Blockchain for trade via airfreight in the future.
- The New Zealand Herald reported that the New Zealand Post and multi-billion dollar dairy conglomerate Fonterra entered into a strategic partnership with Alibaba, the Chinese e-commerce giant. They plan to utilize blockchain technology in preventing counterfeit food from entering large-scale supply chains.
- Callaghan Innovation awarded $315,000 grant to NZ-based Cryptocurrency savings and trading platform, Vimba. This shows real faith from the government in Cryptocurrency and blockchain technology. R&D Project Grants are a type of co-funding for a research and development project. A Callaghan Innovation spokesperson told Cointelegraph that the grants fund up to 40 percent of a project and that 355 such grants were approved during the last fiscal year.
- AsureQuality, New Zealand Post and NZTE have developed the "AsureQuality Food Trust Framework." Participating brand owners shall submit their products to an exhaustive holistic review and verification covering all aspects of their brand story. This framework shall utilize the benefits of blockchain technology in combating counterfeit products.
- Cryptopia is one of the better-known crypto exchanges out there with over 1.5 million users using its platform and it is based in New Zealand. The owners quit their jobs in 2017 and focused on the platform full time. According to this press release, Cryptopia has secured a new, smaller bank that will provide backing to NZ dollar token (NZDT). The news was a welcoming one when ASB closed their accounts associated with NZDT in 2018. As a result, Kiwis can now combat volatility with a dollar-backed token.
Where can Kiwis buy Cryptocurrencies?
- BitPrime is a full-service cryptocurrency retailer. They also provide introductory courses to Crypto and Blockchain.
- EasyCrypto is a registered Financial Service Provider and they make it easy for New Zealanders to buy into the crypto market.
- Vimba is a truly New Zealand way of buying crypto – it’s only available to those located in New Zealand with a New Zealand-based bank account.
- Bittybot does not directly buy/sell Bitcoin but it tracks the best prices on various sites in NZ and Australia to purchase Bitcoin.
Disclaimer: Moonwhale is not affiliated with these companies. Please do your own due diligence prior to making any investment decision.
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About The Author:
Iliya Zaki is the Head of Marketing & Business Development for Moonwhale Ventures. Based in Singapore, Iliya manages the marketing and public relations aspects for Moonwhale as well as clients under advisement. He is also a regular writer for Hackernoon and several other publications such as Investing.com, Daily Hodl, Securities.io, and many more.