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Highlights
- Cryptocurrency is not treated as legal tender in Kiwiland, though crypto trading is allowed in the country.
- Owing to little information pertaining to cryptos as to who owns what and sparse regulations, it becomes challenging for regulators to regulate and stiffen their control over them.
- NZ authorities are working on strengthening their rules and regulatory norms over cryptocurrency usage and trading.
Cryptocurrencies have seen a meteoric rise in their usage in recent times as people are charmed into investing in these new-age digital assets.
New Zealand, being one of the most digital currency-friendly countries in the world, has not banned the use of cryptocurrency; however, Bitcoin and other cryptos are not regarded as legal tender in the country.
A Quick Read: The race to adopt Bitcoin: After El Salvador, who’s next?
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What is IRD’s opinion regarding cryptos?
IRD, i.e., the International Revenue Agency, does not consider cryptocurrencies as legal money or legal tender like the NZD or the USD for tax purposes.
Owing to sparse regulations and crypto’s anonymity feature, it is difficult to determine its owner; hence, it becomes challenging for governments to control and supervise them and offer any sort of legal remedy in case of any dispute or illegal activity.
However, crypto regulations are under development and are likely to strengthen over a period of time.
How is crypto treated in NZ?
Though not regarded as legal tender, cryptocurrencies, including Bitcoin, are taxed in the same way as property and not as foreign currency investments.
In other words, when buying a property in NZ, no tax is paid. But, tax is imposed when selling a property and making a profit from it. Similarly, tax is implied when Bitcoin or altcoins are traded for profit.
Related Read: How crypto assets are treated for tax purposes in NZ
Moreover, IRD has stated the cryptocurrency will be taxed if it is exchanged for fiat cash.
Why is there a need for a well-graduated approach to regulate crypto assets?
Experts opine that in this ever-evolving world, cryptocurrencies carry a host of opportunities and potential to make financial transactions easier and accessible through the use of technology, thus presenting real economic opportunities for New Zealand.
Hence, authorities must take a balanced, cautious and thorough approach while addressing issues related to cryptocurrency usage.
Regulators like the Reserve Bank must make use of enhanced regulatory toolkits to manage the risks posed by some forms of crypto assets, cite trade analysts.
Moreover, it must provide greater insights into matters related to taxation, anti-money laundering and countering terror financing, thereby safeguarding consumer as well as national interests.
Bottom Line
Many federal governments across the globe have tightened their control on cryptocurrencies owing to the various risks imposed by them. It is the need of the hour to undertake a balanced and coordinated approach for crypto regulations.
Do Read: No, India hasn’t banned cryptos yet. It’s just a proposed bill
