00:00:00
Speaker 1: Investing and involves a risk you might lose the money you start with. We recommend talking to a licensed financial advisor. We also recommend reading product disclosure documents before deciding to invest. Everything you're about to see and here is current at the time of record.
00:00:17
Speaker 2: It's a special week on Shared Lunch to mark the recent launch of Shares is Crypto. We're going to be diving into five conversations all about crypto, from how it's evolving to what investors need to know in twenty twenty five and beyond. Just a note though some of these episodes were recorded earlier in the year, so some market prices and movements may have changed. In this third episode, I talked to Blockchain New Zealand chair Jeremy Miuer and I ask him what's the state of play with crypto and Artiro. Welcome, Jeremy, Great to have you on the program again.
00:00:51
Speaker 3: Hi, hele them. It's nice to be here.
00:00:53
Speaker 2: Last time we spoke, it was about eighteen months ago, and that was when the US regulator, the Security Exchange Commission, had approved bitcoin exchange traded funds. Now quite a bit has happened since then. I just be keen on your view on how things have progressed in terms of the acceptance and the legitimizing of crypto.
00:01:14
Speaker 3: Yeah, lock Hellen. A lot has happened in the last twelve months, in particular in the United States, where there has been a bit of a change in a big change in sort of regulatory attitude. Under President Trump. There has obviously been a direction to these Securities and Exchange Commission to be a more positive regulator rather than a negative regulator in some respects. There's also been an unblocking of proposals for legislative reform at the Congress and Senate levels in the United States. So things are happening in that from a regulatory perspective, makes people a little sort of more easy about investing. I think in New Zealand we continue to soldier on. There's definitely interest from the regulators and to a degree from from parliament. Nothing's major, major is on the on the table at the moment, but I think that, together with the core bitcoin price continuing to go up, has obviously spurred a lot of interest in the in the in the area.
00:02:23
Speaker 2: Isn't it that bitcoin? It was the first, I think, first cryptocrat, so you can correct me if I'm wrong. But aren't most of the others more, whether you call them a coin or a token, don't they use the blockchain that So in other words, you're sort of pigged backing off Bitcoin. Is that how it works?
00:02:42
Speaker 3: Yeah, well, in a way, yes, or at least the idea in the technology. Bitcoin was not the first sort of attempt at electronic money or digital currencies, but it was the first to use the particular underlying technology of a blockchain. That technology has then spun out to create other coins and tokens, although they do work differently and they do mean different things. So ethor ethereum, for example, is it's kind of the fuel and the petrol and the underlying sort of coin for a whole system of contracts, decentralized applications. It's a universe of programming that uses ethereum to make payments and do other things. So the riz and fall of ethereum is sort of inherently linked to what people are doing within that wider sort of ethereum ecosystem or network, whereas Bitcoin kind of just stands alone, not entirely, but stands in itself as a store of value and potential sort of payment coin. Whereas all of the other coins are different in their own rights. There are some that are just pure copy and some things are just sort of copies but with iterations or designed to be a little bit faster or to provide an extra layer of functionality, but they can be quite different.
00:04:15
Speaker 2: Looking back home in New Zealand, then, in terms of regulation, you mentioned before that things were kind of soldiering on. I think as a word you used, does that mean that we probably won't see regulation anytime soon or what's your view.
00:04:29
Speaker 3: What we are finding is that the rest of the world is starting to move in terms of actually passing legislation. Some places like Europe have quite detailed legislative and regulatory regimes already in place. The US was a bit stored, but it's now moving quickly. Australia is moving, although not necessarily quickly if you talk to people there, we're kind of still a few steps back in that we have interest. The Financial Markets Authority is doing some consultation around organization and other sort of adjacent parts of the technology, but we don't necessarily necessarily have a thought through legislative framework for cryptocurrencies or digital assets yet.
00:05:17
Speaker 2: The Reserve Bank too has talked about introducing a digital currency. I know they've done sort of review work on that sort of thing. Is that something that's more likely sooner than later, or whether it be a stable coin or something else.
00:05:33
Speaker 3: Yeah, So the Reserve Bank has a project which it has under the label of digital cash generally, and one outcome of that could be a central bank digital currency, so a form of digital money issued by the government. There is already a lot of electronic money that circulates that we're all familiar with, but a lot of that is actually mediated by banks or other people. So when you move money from your bank to someone else's bank, you're really moving rights against your bank to rights against their bank, whereas digital money would be more like cash in the sense that it is directly issued by the government and is directly legal tender and not subject to an intermediary potentially going broke. So that project is underway, it's not moving at a fast clip. They hadn't. The timetable is more that at some point between here and twenty thirty they would hope to get some pilots up and running and possibly get something actually out there. But there are a lot of issues, and there is also a lot of sort of community interest and pushback from largely from people who don't want to see physical cash disappear, which the RBNZ has said is not their intention and not what they're not what they're using this project to explore. So it's really about bringing people along on the journey, so to speak.
00:07:06
Speaker 2: Yeah, thinking of people in more of an acceptance or you know, even the crypto curious, which I think there's a lot of people are, what would you say that they need to be thinking about given that access to cryptocurrencies, particularly with something like the Cheesy's offering which is probably less complicated, and a lot of education and information that goes with that, what sort of things do you think the crypto curious need to be heeding with this? Because it's still an unregulated asset, isn't it.
00:07:38
Speaker 3: Yeah, in part it is, and it's certainly not regulated in the same way and to the same extent that buying shares that are listed on stock markets are regulated. And it is largely in terms of an investment. It is largely around that lack of regulated marketplaces that where there is some risk of both sort of bad behaviors by people sort of pushing particular coins or otherwise or just a lack of technology and security, which has been a bit of a bugbear of some of the exchanges in the past. Those things are evolving in both cases, but for the crypto curious, I think it's still a great opportunity to understand the technology which is part of the digital world that we live in and that we're evolving further into. As an investment, it's like any investment one where you need to do your research and understand what you're getting into. There is a fundamental volatility in a lot of crypto assets that reflects that it's not an evolved market to the way that say the share market is. The share market has a lot of a lot of institutional players and rules reasons which do sort of chip the edge off a lot of that volatility, but that's still there in crypto markets. So you can't put money into these markets and expect that it will go up automatically or forever. It may equally go down, and it may go up and down faster than investments in more traditional markets.
00:09:21
Speaker 2: Now, Jeremy, I know you're not a tax lawyer, but it is always good to remind people about what sort of treatment crypto has in terms of tax.
00:09:30
Speaker 3: Yeah, as you say, I'm not a tax lawyer, but I'm very lucky in that I get to spend a lot of time with tax lawyers in my job. So you the fundamental taxation point to understand with buying and selling crypto generally, and you know, I use crypto in the widest sense, but as we've said, it's actually it's just technology. So you really have to look at exactly what you're buying. But let's say most things like bitcoin is that it's unlike a share in that you can't buy it with the expectation that it's going to pay you a dividend. And that means from a tax perspective that from the IDEs perspective, you may well be buying it with the intention of one day selling it because there's not really anything else to do with it, even if you are buying things with it or transacting with it, that you're really selling it. So because it's kind of an item, it's not actually money. So what that means is that you may be fully liable for tax on any profits that you make when you sell bitcoin, say in a way that you may not be if you buy shares, where if you buy shares and hold them on capital account, you make a capital gain. You didn't buy them with the intention of reselling them. You may have bought them because you just want to see them grow and then maybe earn some dividends along the way. It's kind of the same argument that people would make with rental properties and things like that. You just can't really make that argument with a lot of crypto assets. Possibly, if you are buying them with the intention of staking them or earning a return, you may be able to make a different argument. Obviously you don't make a profit, then you don't have to pay any.
00:11:10
Speaker 2: Tax, do you, I mean, anything else you'd like to add, Just be interested in any observations you've had in the last year or so which you think are pertinent to this conversation.
00:11:21
Speaker 3: One of the issues with crypto to date has just been the opacity, impenetrability, and difficulty of both acquiring assets keeping them. If you've you know, with the various pass codes and private keys and other information you need, it has not been user friendly. So ultimately the technology to get wider acceptance and usage has to be made more user friendly, so you know, ways like share these hopefully will help with adoption. And make it easier for people to if they wish to get some exposure, get exposed in a more straightforward way.
00:12:04
Speaker 2: There is that argument, though, Jeremy, that the complications almost like a dark art if you like, that's kind of deliberate because it does keep it to fewer people.
00:12:18
Speaker 3: What I've seen and over the history has been the initial adopters and the very early community were almost entirely tech people. Then what you've added on top of that is a layer of over the last several years, quite extreme institutional interest and a few sort of dabblers around the side. What we haven't really had is a very retail focused group of people or businesses, or at least that people have tried, have tried, but they haven't quite now it yet, And I think that's still coming. So I don't think it's intentional. I think it's it reflects the makeup of the people who have been dry having it from here.
00:13:00
Speaker 2: So how do you think those early adopters feel about it going mainstream. I'm not sure it is mainstream. There's a lot of talk about crypto being mainstream, but I think it's probably heading that way.
00:13:10
Speaker 3: Ah. Look, I'm sure some of them probably think it's it's the end of end of a dream, or it's a divergence from the true path, and whether or not they're right, time will Time will tell. Crypto is generally considered a high risk investment. It's not suitable for everyone, especially if you're uncomfortable with the potential of losing some or all of your investment. For more information or crypto and it's specific risks, check out Cheesy Dotting team slash Crypto. Jesus Crypto has offered place Jesus Crypto
Speaker 1: Investing and involves a risk you might lose the money you start with. We recommend talking to a licensed financial advisor. We also recommend reading product disclosure documents before deciding to invest. Everything you're about to see and here is current at the time of record.
00:00:17
Speaker 2: It's a special week on Shared Lunch to mark the recent launch of Shares is Crypto. We're going to be diving into five conversations all about crypto, from how it's evolving to what investors need to know in twenty twenty five and beyond. Just a note though some of these episodes were recorded earlier in the year, so some market prices and movements may have changed. In this third episode, I talked to Blockchain New Zealand chair Jeremy Miuer and I ask him what's the state of play with crypto and Artiro. Welcome, Jeremy, Great to have you on the program again.
00:00:51
Speaker 3: Hi, hele them. It's nice to be here.
00:00:53
Speaker 2: Last time we spoke, it was about eighteen months ago, and that was when the US regulator, the Security Exchange Commission, had approved bitcoin exchange traded funds. Now quite a bit has happened since then. I just be keen on your view on how things have progressed in terms of the acceptance and the legitimizing of crypto.
00:01:14
Speaker 3: Yeah, lock Hellen. A lot has happened in the last twelve months, in particular in the United States, where there has been a bit of a change in a big change in sort of regulatory attitude. Under President Trump. There has obviously been a direction to these Securities and Exchange Commission to be a more positive regulator rather than a negative regulator in some respects. There's also been an unblocking of proposals for legislative reform at the Congress and Senate levels in the United States. So things are happening in that from a regulatory perspective, makes people a little sort of more easy about investing. I think in New Zealand we continue to soldier on. There's definitely interest from the regulators and to a degree from from parliament. Nothing's major, major is on the on the table at the moment, but I think that, together with the core bitcoin price continuing to go up, has obviously spurred a lot of interest in the in the in the area.
00:02:23
Speaker 2: Isn't it that bitcoin? It was the first, I think, first cryptocrat, so you can correct me if I'm wrong. But aren't most of the others more, whether you call them a coin or a token, don't they use the blockchain that So in other words, you're sort of pigged backing off Bitcoin. Is that how it works?
00:02:42
Speaker 3: Yeah, well, in a way, yes, or at least the idea in the technology. Bitcoin was not the first sort of attempt at electronic money or digital currencies, but it was the first to use the particular underlying technology of a blockchain. That technology has then spun out to create other coins and tokens, although they do work differently and they do mean different things. So ethor ethereum, for example, is it's kind of the fuel and the petrol and the underlying sort of coin for a whole system of contracts, decentralized applications. It's a universe of programming that uses ethereum to make payments and do other things. So the riz and fall of ethereum is sort of inherently linked to what people are doing within that wider sort of ethereum ecosystem or network, whereas Bitcoin kind of just stands alone, not entirely, but stands in itself as a store of value and potential sort of payment coin. Whereas all of the other coins are different in their own rights. There are some that are just pure copy and some things are just sort of copies but with iterations or designed to be a little bit faster or to provide an extra layer of functionality, but they can be quite different.
00:04:15
Speaker 2: Looking back home in New Zealand, then, in terms of regulation, you mentioned before that things were kind of soldiering on. I think as a word you used, does that mean that we probably won't see regulation anytime soon or what's your view.
00:04:29
Speaker 3: What we are finding is that the rest of the world is starting to move in terms of actually passing legislation. Some places like Europe have quite detailed legislative and regulatory regimes already in place. The US was a bit stored, but it's now moving quickly. Australia is moving, although not necessarily quickly if you talk to people there, we're kind of still a few steps back in that we have interest. The Financial Markets Authority is doing some consultation around organization and other sort of adjacent parts of the technology, but we don't necessarily necessarily have a thought through legislative framework for cryptocurrencies or digital assets yet.
00:05:17
Speaker 2: The Reserve Bank too has talked about introducing a digital currency. I know they've done sort of review work on that sort of thing. Is that something that's more likely sooner than later, or whether it be a stable coin or something else.
00:05:33
Speaker 3: Yeah, So the Reserve Bank has a project which it has under the label of digital cash generally, and one outcome of that could be a central bank digital currency, so a form of digital money issued by the government. There is already a lot of electronic money that circulates that we're all familiar with, but a lot of that is actually mediated by banks or other people. So when you move money from your bank to someone else's bank, you're really moving rights against your bank to rights against their bank, whereas digital money would be more like cash in the sense that it is directly issued by the government and is directly legal tender and not subject to an intermediary potentially going broke. So that project is underway, it's not moving at a fast clip. They hadn't. The timetable is more that at some point between here and twenty thirty they would hope to get some pilots up and running and possibly get something actually out there. But there are a lot of issues, and there is also a lot of sort of community interest and pushback from largely from people who don't want to see physical cash disappear, which the RBNZ has said is not their intention and not what they're not what they're using this project to explore. So it's really about bringing people along on the journey, so to speak.
00:07:06
Speaker 2: Yeah, thinking of people in more of an acceptance or you know, even the crypto curious, which I think there's a lot of people are, what would you say that they need to be thinking about given that access to cryptocurrencies, particularly with something like the Cheesy's offering which is probably less complicated, and a lot of education and information that goes with that, what sort of things do you think the crypto curious need to be heeding with this? Because it's still an unregulated asset, isn't it.
00:07:38
Speaker 3: Yeah, in part it is, and it's certainly not regulated in the same way and to the same extent that buying shares that are listed on stock markets are regulated. And it is largely in terms of an investment. It is largely around that lack of regulated marketplaces that where there is some risk of both sort of bad behaviors by people sort of pushing particular coins or otherwise or just a lack of technology and security, which has been a bit of a bugbear of some of the exchanges in the past. Those things are evolving in both cases, but for the crypto curious, I think it's still a great opportunity to understand the technology which is part of the digital world that we live in and that we're evolving further into. As an investment, it's like any investment one where you need to do your research and understand what you're getting into. There is a fundamental volatility in a lot of crypto assets that reflects that it's not an evolved market to the way that say the share market is. The share market has a lot of a lot of institutional players and rules reasons which do sort of chip the edge off a lot of that volatility, but that's still there in crypto markets. So you can't put money into these markets and expect that it will go up automatically or forever. It may equally go down, and it may go up and down faster than investments in more traditional markets.
00:09:21
Speaker 2: Now, Jeremy, I know you're not a tax lawyer, but it is always good to remind people about what sort of treatment crypto has in terms of tax.
00:09:30
Speaker 3: Yeah, as you say, I'm not a tax lawyer, but I'm very lucky in that I get to spend a lot of time with tax lawyers in my job. So you the fundamental taxation point to understand with buying and selling crypto generally, and you know, I use crypto in the widest sense, but as we've said, it's actually it's just technology. So you really have to look at exactly what you're buying. But let's say most things like bitcoin is that it's unlike a share in that you can't buy it with the expectation that it's going to pay you a dividend. And that means from a tax perspective that from the IDEs perspective, you may well be buying it with the intention of one day selling it because there's not really anything else to do with it, even if you are buying things with it or transacting with it, that you're really selling it. So because it's kind of an item, it's not actually money. So what that means is that you may be fully liable for tax on any profits that you make when you sell bitcoin, say in a way that you may not be if you buy shares, where if you buy shares and hold them on capital account, you make a capital gain. You didn't buy them with the intention of reselling them. You may have bought them because you just want to see them grow and then maybe earn some dividends along the way. It's kind of the same argument that people would make with rental properties and things like that. You just can't really make that argument with a lot of crypto assets. Possibly, if you are buying them with the intention of staking them or earning a return, you may be able to make a different argument. Obviously you don't make a profit, then you don't have to pay any.
00:11:10
Speaker 2: Tax, do you, I mean, anything else you'd like to add, Just be interested in any observations you've had in the last year or so which you think are pertinent to this conversation.
00:11:21
Speaker 3: One of the issues with crypto to date has just been the opacity, impenetrability, and difficulty of both acquiring assets keeping them. If you've you know, with the various pass codes and private keys and other information you need, it has not been user friendly. So ultimately the technology to get wider acceptance and usage has to be made more user friendly, so you know, ways like share these hopefully will help with adoption. And make it easier for people to if they wish to get some exposure, get exposed in a more straightforward way.
00:12:04
Speaker 2: There is that argument, though, Jeremy, that the complications almost like a dark art if you like, that's kind of deliberate because it does keep it to fewer people.
00:12:18
Speaker 3: What I've seen and over the history has been the initial adopters and the very early community were almost entirely tech people. Then what you've added on top of that is a layer of over the last several years, quite extreme institutional interest and a few sort of dabblers around the side. What we haven't really had is a very retail focused group of people or businesses, or at least that people have tried, have tried, but they haven't quite now it yet, And I think that's still coming. So I don't think it's intentional. I think it's it reflects the makeup of the people who have been dry having it from here.
00:13:00
Speaker 2: So how do you think those early adopters feel about it going mainstream. I'm not sure it is mainstream. There's a lot of talk about crypto being mainstream, but I think it's probably heading that way.
00:13:10
Speaker 3: Ah. Look, I'm sure some of them probably think it's it's the end of end of a dream, or it's a divergence from the true path, and whether or not they're right, time will Time will tell. Crypto is generally considered a high risk investment. It's not suitable for everyone, especially if you're uncomfortable with the potential of losing some or all of your investment. For more information or crypto and it's specific risks, check out Cheesy Dotting team slash Crypto. Jesus Crypto has offered place Jesus Crypto
