Seeing Matt Damon front an ad for cryptocurrency exchange crypto.com this week, was not only a smart marketing flex for the company, but an indication that crypto has well and truly entered mainstream culture.
Other celebrities fronting for crypto platforms – in a trend some have called “the Hollywoodisation of crypto” – include Gwyneth Paltrow, Kim Kardashian, Lionel Messi, Johnny Depp and Floyd Mayweather.
Then there’s incoming mayor of New York, Eric Adams, who is taking his first pay checks in bitcoin and thinks crypto should be taught in schools.
Closer to home All Black legend Dan Carter is involved with Glorious a Kiwi-owned NFT studio and marketplace with all of its sales conducted in crypto.
Although written off by some, like mathematician and author Nassim Nicholas Taleb, as a gigantic Ponzi scheme – (“I realised that [crypto] was not a currency without government. It was just pure speculation. It’s just like a game. Nothing. I mean, nothing else. I mean, you can create another game and call it a currency’’) – cryptocurrencies are a growing player in the monetary system and the market cap is more than $2.5 trillion USD with more than 200 million users globally.
It’s estimated that the New Zealand market for digital assets is worth $210 million NZD and growing as bitcoin prices have almost doubled in the last year, sitting at $67,402.56 USD as I write this.
Faced with that governments, banks and credit card companies, after sitting on their hands hoping it’ll bust not boom and just go away, are starting to embrace it.
This week Mastercard announced the launch of its first cryptocurrency linked payment cards in the Asia Pacific region.
It is partnering with Amber Group in Singapore, Bitkub in Thailand, and CoinJar in Australia, all of which offer cryptocurrency purchase and exchange services in their respective domestic markets.
While some merchants already accept payments in digital currencies such as Bitcoin or Ethereum, until now you can’t go down to your local Pak’N Save and pay in bitcoin.
Cardholders will now be able to instantly convert their cryptocurrencies into traditional fiat currency which can be spent everywhere Mastercard is accepted, both online and offline.
Currency enters Mastercard’s network as traditional fiat currency which makes buying goods and services as easy as swiping your credit card.
The move follows Mastercard research that revealed growing interest in crypto throughout the Asia-Pacific region.
45 percent of those surveyed in APAC say they are likely to consider using cryptocurrency in the next year – a huge jump over the 12 percent that already used it in the last year, and higher than the global average of 40 percent.
Even Ex PM and ANZ NZ chairman John Key is pushing crypto – “I think central banks increasingly could issue their own cryptocurrencies – and if not issue them, certainly be supportive of them,” he said in a recent online event.
The issue Key recognises is that banks either get in on the game now or risk losing out on a very profitable sector.
If cryptocurrencies have been allowed to roam essentially unchecked that window is fast closing.
President Biden is laying the groundwork for regulation, but faces a big fight in Congress.
For the most part crypto platforms operate here with minimum oversight. Yes, they are required to follow our tax, terrorism and AML rules and must register with the Department of Internal Affairs, but no other safeguards are in place for users.
Even the platforms themselves are asking for direction – “…it’d be great to have more clarity and guidance from regulators,” Pav Hundal of recent crypto arrival Swyftx told me when I interviewed him in September.
If a platform’s hacked – and you didn’t store your crypto in a wallet – you’re on your own – cast your mind back to the 2019 $24 million hack of Christchurch cryptocurrency platform Cryptopia – but if you’d had your money in bank your money would’ve been safe – as the RB requires the mostly Australian-owned banks to raise $20 billion to meet safety requirements.
The other thing potential investors should keep in mind is that anyone can create a cryptocurrency – dogecoin for example, was started as a joke but its value soared by thousands of percentage points in a few weeks. Research is vital to determine whether a coin is legit or a fraud.
Even the two main coins, bitcoin and ether, can be incredibly volatile.
NZ crypto inquiry
Not before time in July the Finance and Expenditure Committee, chaired by Labour MP Duncan Webb, launched an inquiry into cryptocurrencies.
As well as looking at the perceived negatives of crypto – volatility, energy implications, criminals using digital assets for money laundering or extortion, Webb said they also wanted to look at the positives.
“It’s not all on the downside, it’s on the upside as well,” he told RNZ.
“We want to understand whether government ought to be looking at regulating or encouraging this kind of technology.”
We are still awaiting the inquiry’s outcome but if the Reserve Bank’s submission was anything to go by don’t expect New Zealand to be a vanguard for innovation in this space.
It maintained that NZ regulators will need enhanced regulatory toolkits “to manage the risks posed by some forms of crypto-assets” – saying it was particularly troubled by stable coins – cryptocurrencies tied to the value of official currencies (as was Facebook’s doomed diem coin) such as the New Zealand dollar, but which are not backed by a legal claim on the central bank.
Its submission went on to say that – “The Reserve Bank prefers not to use the term ‘crypto-currency’ as it implies attributes – a safe store of value, a stable medium of exchange and a reliable unit of account – associated with conventional currencies that ‘crypto-currencies’ do not have.”
Clearly unsettled by the prospect of a decentralised monetary system it would have little control over the Reserve Bank is instead investigating launching its own Central Bank Digital Currency. That would allow the money in your bank account to be withdrawn in central bank money backed by the New Zealand government – currently only available through physical cash.
While the regulators fiddle the message that cryptocurrency is the cool new investment asset class – one promoted by top Hollywood stars – grows.
NZ crypto marketplace Easy Crypto last month secured 17 million NZD in an over-subscribed investment round.
In a telling comment to Stuff Easy Crypto chief executive and co-founder, Janine Grainger, said that it took 13 months to get its first dollar of investment, and then went to raise the $17m in just three weeks.