Adrian Orr, the Governor of the Reserve Bank of New Zealand, shared his skepticism towards stablecoins, pointing out their lack of stability. Meanwhile, in Nigeria, Adedeji Owonibi from A&D Forensics called for comprehensive regulation of the crypto sector to fight financial crimes, after the Central Bank of Nigeria's decision to allow banks to serve as Virtual Assets Service Providers. Additionally, OKX expanded its operations to Argentina despite the Argentine central bank's restrictions on crypto transactions.
NZ Central Bank Governor Critiques Stablecoins
Adrian Orr, the Governor of the Reserve Bank of New Zealand (RBNZ), expressed his skepticism towards stablecoins during a presentation to a parliamentary finance committee on Feb. 12. Orr criticized stablecoins for their lack of stability, labeling them as "the biggest misnomers" and "oxymorons." His comments were in response to questions about the RBNZ's stance on decentralized digital currencies and stablecoins.
Orr argued that stablecoins fail to serve as reliable means of exchange, stores of value, or units of account, mainly because their stability is contingent on the financial health of their issuers rather than intrinsic value. He contrasted this with fiat currencies like the New Zealand dollar, which are backed by legislative power and the credibility of an independent central bank tasked with maintaining low and stable inflation.
Orr also emphasized the importance of transparency and blunt communication about the risks associated with these assets. He mentioned that there is a regulatory push on stablecoins, pointing towards the United Kingdom as an example of a jurisdiction taking a strict approach towards their regulation.
The conversation around cryptocurrency regulation in New Zealand has been very cautious. A parliamentary report from August of 2023 advised against premature regulation of the crypto market, recommending instead the development of coherent guidance on the treatment of digital assets under existing laws. On the other hand, New Zealand is exploring the potential design, costs, and benefits of a Central Bank Digital Currency (CBDC).
Nigeria's New Crypto Landscape
Meanwhile, in Nigeria, Adedeji Owonibi, the Co-founder of A&D Forensics, has called for comprehensive regulation of cryptocurrency activities in the country. Speaking at a training event for crypto compliance specialists organized by a Blockchain and Digital Forensic firm on Feb. 9, Owonibi highlighted the risks associated with the unregulated crypto space in Nigeria, including money laundering and other financial crimes. He firmly believes in the importance of establishing clear laws to govern the crypto sector, emphasizing that without these laws, it becomes much more challenging to define or prosecute offenses.
The call for regulation comes after the Central Bank of Nigeria's (CBN) recent decision to reverse a previous ban on cryptocurrency transactions, now allowing banks to operate accounts for Virtual Assets Service Providers (VASP). This reversal integrates cryptocurrencies into the formal banking sector while ensuring compliance with financial regulations to prevent illegal activities.
Owonibi further underscored the role of compliance specialists in this new regulatory landscape. These specialists are essential for banks to make sure that transactions through their platforms do not facilitate criminal activities. The training for compliance specialists is part of a broader effort to equip financial institutions with the necessary tools and knowledge to adhere to legal requirements in their dealings with VASPs.
The necessity for regulation is also driven by the potential misuse of cryptocurrencies for money laundering, drug trafficking, and terrorism financing. By ensuring that VASPs listen to compliance standards, banks can prevent their platforms from being used for unlawful purposes. Owonibi's advocacy for regulation is supported by the issuance of guidelines by the CBN, which now permit virtual asset service providers to open accounts with Nigerian banks, subject to strict compliance standards.
Despite the easing of the ban by the CBN, there is a call for the Nigerian Securities and Exchange Commission (SEC) to revisit and refine the guidelines for crypto exchanges. This would enable local crypto exchanges to get licenses and operate in a regulated framework, further integrating the crypto economy into Nigeria's broader financial system.
With the government training law enforcement agents as compliance specialists, there is a clear and concerted effort to protect the security and integrity of Nigeria's financial system in the face of emerging digital currencies.
OKX Expands to Argentina
Argentina, on the other hand, seems to be embracing crypto. Crypto exchange OKX is making strides in the Latin American market with its expansion into Argentina, after a successful launch in Brazil in late 2023. This move allows Argentine users to access OKX's crypto exchange platform, featuring a self-custody wallet and options to trade non fungible tokens (NFTs).
Argentina's engagement with cryptocurrency is impressive, ranking 15th on the Chainalysis 2023 Global Crypto Adoption Index. This index measures crypto adoption using on-chain and real-world data, with Brazil ranking even higher at ninth.
This expansion by OKX into Argentina comes around nine months after Binance began offering services in the country. Binance's decision to expand was driven by the increasing demand for crypto services in Argentina, indicating a strong and growing market interest. OKX's initiative in Argentina certainly aligns with this trend, with OKX president Hong Fang sharing his excitement about tapping into one of the most dynamic crypto markets in Latin America.
The Argentine government has also shown openness to cryptocurrency, with the "Bases for the Reconstruction of the Argentine Economy" decree passed in December of 2023, allowing for contracts to be settled in Bitcoin and other cryptocurrencies.
However, challenges still remain, like the Argentine central bank's ban in May of 2023 on payment providers from facilitating crypto transactions. This was aimed at minimizing the payment system's exposure to digital assets and ensuring fintech companies adhere to the same regulations as traditional financial institutions.