WELLINGTON (CU)_Amid growing interest in cryptocurrencies across the globe, many governments have begun clamping down on the industry, particularly on account of money laundering concerns. The fact that these currencies are decentralised and are difficult to trace, makes them attractive for use by criminals. Moreover, rise of digital currencies have also given way to the emergence of various scams that use the asset to lure people into them. This has been widespread in countries across the globe, including New Zealand, where a South Auckland woman, who was promoting a suspected cryptocurrency pyramid scheme called ‘Lion’s Share’, was issued a stop notice by the Commerce Commission last year.
Now, amid growing concerns among authorities, MPs are set to hold an inquiry into cryptocurrencies, to discover its risks to users, the monetary system, as well as the environment. According to the Finance and Expenditure Committee, the inquiry is aimed at looking at how digital currencies are created and traded, their use and misuse and the implication they might have on the tax system and regulators. On the other hand, following concerns raised by environmental campaigners, the MPs also intend to consider the environmental impact of mining cryptocurrencies.
“The fact of the matter is they are an emerging asset and we really don’t know quite how they work,” the committee’s chair, MP Duncan Webb, said. “A lot of people who are investing in them don’t really know what the volatility is.”
Speaking during Radio New Zealand’s weekday news programme Checkpoint, the minister noted that it is the anonymity linked to these digital assets that make it ideal for the use of criminal purposes. “In terms of how we fight crime, follow the money is rule number one and it’s very hard to follow crypto-currencies,” he said. “We do know that criminal organisations are using crypto-currencies… yes it’s a concern, but it’s not the driving concern.”
The Labour’s MP also noted that the through the inquiry, the ministers also intend to look at the positives of cryptocurrencies and consider the possibility of regulating them, either by states, central banks or through multi-lateral co-operations. “It’s not all on the downside, it’s on the upside as well… We want to understand whether government ought to be looking at regulating or encouraging this kind of technology,” he added.
