Bitcoin reached a new all-time high in June when it inched close to the $3,000 mark after an impressive six-month rally that saw the cryptocurrency triple in value. Unsurprisingly, bitcoin has been all over the media in the past few months as global adoption and the demand is increasing. However, adoption rates are faster in some countries, such as Japan, China, and India than others. One of the countries where bitcoin adoption is slower than expected is New Zealand.
According to a report by local news publication, bitcoin adoption has been slow in New Zealand because it is not that easy to actually buy bitcoin locally using the New Zealand dollar. Bitcoin buying options for New Zealanders are effectively limited to peer-to-peer exchanges such as LocalBitcoins and Paxful, where buy prices usually come with a high premium and the country only has a handful of local exchanges, such as NZBCX and Cryptopia.
There is also the bitcoin exchange Coined, which allows users to buy the cryptocurrency using online bank deposits but on its website, it states, “The [bitcoin order] queue has been full for six days, five hours. Coined’s current bitcoin reserves have been depleted due to high demand. Use the form below to receive notification when your order can be placed.” Also, according to news publication Stuff, there is a bitcoin ATM in an Auckland bar that has not really attracted many users.
The reason for the limited buying options in New Zealand is the challenges that both bitcoin startups and individual bitcoiners are facing when dealing with local banks. Unfortunately, this is not a new phenomenon in the Bitcoin economy and has also been a prevalent issue in the United Kingdom where banks have closed bank accounts of users who have purchased bitcoin using bank transfers and have closed bank accounts of bitcoin startups to ebb the growth of cryptocurrencies.
NZBCX founder Dave Seyb highlighted the difficulties bitcoin startups are facing in New Zealand when it comes to setting up a business bank account in an interview with Newsroom:
“NZBCX is a bitcoin exchange and like anyone dealing with cryptocurrency in New Zealand, faces an almost automatic bank lockout, [which] makes it impossible to get venture funding.”
Seyb’s claim is not disputed by Peter Fletcher-Dobson, Kiwibank’s Digital Advisor, who told Newsroom that it is difficult to set up a cryptocurrency business in the country due to the banks’ risk-averse approach to digital currency innovation:
“[…] it is very challenging for them to operate legally, because there is no true digital identity solution that bridges crypto and fiat financial systems.”
If New Zealand wants to embrace FinTech innovation it would not be wise to neglect cryptocurrencies. Neighbouring Australia, for example, has taken a more positive stance towards digital currencies and, as a result, now hosts several leading blockchain companies that are developing impactful FinTech solutions.
While it is understandable that banks are fast to shy away from a technology that is meant to disintermediate them, there is also a wave of benefits for financial institutions that embrace cryptocurrencies such as faster and cheaper interbank cross-border payments for example. New Zealand’s banks would, therefore, be better of collaborating with bitcoin startups, instead of closing their doors on them if they want to be able to stay competitive in the future.