The Reserve Bank is preparing for the day when cryptocurrency goes mainstream in New Zealand but there are plenty of sceptics who doubt the benefits of digital assets. Ben Rose argues the case for moving forward.
A month or so ago we heard the unfortunate tale of New Zealand’s own crypto-exchange disaster, echoing in microcosm the higher-profile recent sagas from across the world of crypto.
Dasset, a small NZ-owned crypto exchange, made headlines when its users found themselves suddenly locked out of their wallets, unable to access their funds – which for some were very substantial holdings.
This local example of a global issue has raised important questions in New Zealand about the role of regulation in the burgeoning digital assets and blockchain sector.
Coincidentally, the Dasset news emerged around the same time the Commerce Commission announced that it is “looking at ways to remove barriers to more innovative payment options” (a key blockchain use case), which itself followed the Reserve Bank of New Zealand putting out a document saying “New Zealanders and the New Zealand economy should benefit from modern real time account-to-account payments capability” (again, a key area of interest to blockchain developers).
Since then, we’ve had the New Zealand Parliament’s Finance and Expenditure Committee release the findings of its inquiry into the ‘current and future nature, impact and risks of cryptocurrencies in New Zealand’.
It recommends that the Government adopt a policy stance that cautiously encourages developments in digital assets and blockchain in New Zealand.
There’s a theme emerging in Wellington, quite rightly, that digital assets and blockchain technologies will play a central role in New Zealand’s financial future.
Recently Newsroom ran an opinion piece by a media, film and communication lecturer critiquing the Parliamentary Finance and Expenditure Select Committee’s report.
It was a highly animated piece, with phrases like ‘crypto-boosterism’ and ‘crypto-colonialists’ and charged that “The fact Binance has commended the Finance and Expenditure Committee’s report should be a source of shame.” It mentioned me, criticising my role on the Exec Council of BlockchainNZ, an industry body created to encourage growth in the space locally. It also directly referenced an ongoing US SEC complaint, on which Binance has made public its response from the outset.
Cards on the table: I lead Binance’s operations across the ANZ region, It’s a broad and complex role and from my vantage point I’ve seen first-hand the progress we have made in our part of the world in a short space of time.
We’ve grown from an idea into not only the largest digital assets exchange by trading volume but a global blockchain ecosystem.
When a business grows so quickly, in such a novel way, in a sector being invented from scratch as we speak (with all the regulatory growing pains that entails), you naturally court criticism from some quarters.
I respect concerned individuals’ right to advance such critiques and I also believe it invites a right of reply. So here we are.
Firstly, much of the criticism the industry faces – including in the piece I’ve referenced – hangs on a generally dismissive attitude towards both blockchain and the future potential of digital asset markets. It’s hard to respond to such criticism delicately when the potential of this sector is by this point self-evident. The market cap for all digital assets today exceeds $US1 trillion. A sceptical individual may not acknowledge that value, but a truly astronomical amount of market value has already been created and these are still early days.
Should Aotearoa miss out on the rapidly expanding commercial opportunities associated with this exponential sector because some commentators think it’s a bit silly? The piece dismissively referenced a locally grown blockchain business that has achieved digital asset sales in the tens of millions. Kiwi crypto/blockchain start-ups have in recent years garnered some of the largest funding rounds in New Zealand history. This is real world value. It means high tech jobs. Research and development funding. The establishment of a development ecosystem that attracts foreign talent.
The form factor of digital assets, be they unique collectables, in-game skins, digital artworks or a proliferation of novel investment vehicles, is still up for grabs. There will be failed experiments. Assets that launch strongly may lose their value. Some ideas might fail to capture the public imagination. But the underlying technology is sound and if you zoom out over the past decade, the trend in this space – be it total market capitalisation, penetration, patents filed, businesses incorporated – runs up and to the right.
The aforementioned opinion piece also takes a swipe at the provenance of the Select Committee’s report. A broad range of people and organisations made submissions to the Select Committee, including industry players. This is gestured at as some sort of smoking gun.
But of course the people advising the Select Committee on where the industry is going along with its potential impacts and risks should include the people taking an active interest in the industry. It’s then incumbent on the government to reflect on that advice and act in the best interests of the people of New Zealand.
It is no secret that, around the world Binance, proactively seeks to work with policymakers and regulators and encourages the adoption of regulatory frameworks for blockchain and digital assets.
This is because it’s better for any business to operate with certainty. It’s also better for the consumer, who benefits from a regulated environment that protects them from bad actors, ultimately improving trust and expanding the space. We firmly believe forward-thinking regulatory frameworks that support innovation and adequately protect users are possible.
So, my view from the coalface is that technologies like these are the future, and that Kiwis should embrace these developments with cautious, considered optimism.
