Cryptocurrency Heading Towards A Greener Future

The cryptocurrency ecosystem is shifting towards a
cleaner, greener future.

Most energy used to mine
crypto already comes from renewable sources. Rather than
harm the planet, crypto and blockchain can actually be a
force for environmental good.

The debate around
bitcoin and its carbon footprint has focused on the energy
they consume, BlockchainNZ chair Bryan Ventura
says.

Cryptocurrency is a form of payment that can be
exchanged online for goods and services. Many companies have
issued their own currencies, often called tokens, and these
can be traded for goods or services that the company
provides.

Companies are also creating new financial
products and services using blockchain technology, or
decentralised finance. There are also new forms of virtual
assets being created, using non-fungible tokens.
Cryptocurrencies, decentralised finance and virtual assets
work using a technology called
blockchain.

“Cryptocurrency adoption has soared
during the covid pandemic, as private investors, public
companies and underbanked individuals realised the benefits
of digital currencies.

“Regulators have struggled to
keep up with this growth and may limit financial inclusion
by applying rules to crypto markets that are not fit for
purpose.

“By looking to past eras of innovation,
regulators can work collaboratively to adapt rules and
policies to support open competition and rapid innovation in
the cryptocurrency sector.

“But bitcoin does consume
resources. As with every other energy-consuming industry,
it’s up to the crypto community to acknowledge and address
these environmental concerns.

“Governments around
the world are looking to increase the regulation of
cryptocurrencies and virtual assets, which may extend to
decentralised finance, non-fungible tokens and potentially
other concepts using blockchain technology. There is a risk
that Aotearoa New Zealand may follow suit.

“In doing
so it may unintentionally hinder our virtual asset industry.
Regulation and compliance are also relevant to New
Zealand’s virtual asset business access to bank
accounts.”

BlockchainNZ, which is part of the NZTech
Alliance, can help government understand the basics,
starting at how bitcoin/blockchain works through to smart
contracts, security tokens and decentralised autonomous
organisations.

Parliament’s finance and expenditure
select committee is poring over 260 submissions into an
inquiry into the nature, impact and risk of
cryptocurrencies. Submissions closed earlier this
month.

Cryptocurrencies are an emerging source of
innovation that promises to democratise financial markets.
Some cryptocurrencies have the potential to provide a better
a store of wealth than official currencies.

The
Reserve Bank says in its submission that products such as
bitcoin claimed to be an alternative form of money but were
little used as a form of payment.

However,
BlockchainNZ told the select committee that the combined
value of cryptocurrencies stood at almost $3 trillion in
August and that most activities involving cryptocurrencies
in New Zealand are captured under existing
laws.

Dozens of individuals and companies involved in
the crypto-currency industry made submissions in favour of
cryptocurrencies.

BlockchainNZ’s submission
encourages the government to work with the local New Zealand
industry to shape standards for virtual asset services
providers (VASPs), firms that manage
cryptocurrencies for people, covering providing education
about the risks and how cryptocurrencies should be managed
by these trusted third parties.

“It is important to
balance the mitigation of risks associated with
cryptocurrencies and VASPs, against the importance of
preserving a legal and regulatory environment which does not
unduly stifle New Zealand innovation and prevent willingly
compliant enterprises from operating.

“Achieving
this balance would have positive flow on effects on the
wider economy, such as growth in the New Zealand tax base
and employment, consumer protection and an overall reduction
in money laundering and terrorism financing
risk.”

© Scoop Media

 

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