The price of Bitcoin is up more than 100 per cent this year and has outperformed the price of gold over several years. Larry Lepard explains why he likes both digital and traditional gold as inflation hedges. Video / NZ Herald
Cryptocurrency investors can now buy a coin pegged to the New Zealand dollar, making swapping our traditional currency for crypto faster and simpler.
A company linked to the local crypto-trading platform Easy Crypto launched NZDD on Wednesday as a means to increase investor uptake of cryptocurrency – a first thatbeats the Reserve Bank of New Zealand to launching a digital currency.
“Everything is going digital – including currency – but what makes many people hesitate is the stability of these assets,” Easy Crypto co-founder and chief executive Janine Grainger said.
“We wanted to change this by offering a trusted NZ dollar-backed stablecoin – NZDD – that bridges the gap between traditional finance and the digital age.”
Investor holdings of NZDD would be held one-for-one with New Zealand dollars in an Easy Crypto-controlled trust account. Easy Crypto would earn the interest on funds held in the account, like a deposit savings account.
A New Zealand dollar stablecoin is similar to what a central bank digital currency (CBDC) could look like, which is something the RBNZ is exploring but has not committed to.
“Regulators are becoming more familiar with these concepts,” Grainger told the Herald.
“There’s a lot of precedent overseas and I think it’s just increasingly becoming a given that this is where we are heading towards, that money is digitising.”
Internationally popular stablecoins included Tether (USDT), USDC or USDD, which were all pegged to the United States dollar.
Stablecoin Terra, aka UST, and its sister coin Luna, both failed when Terra’s value fell below US$1 causing it to de-peg from the US dollar. The combined losses reportedly totalled nearly NZ$100 billion (US$60b).
Grainger stressed that its NZDD coin and relative trust account was not linked to an algorithm like Luna and would be externally, publicly audited by Ernst & Young.
“It’s really very simple. Every dollar that comes into the ecosystem is backed by a real dollar in the bank account.
“If someone comes in and wants to buy $1 million worth, that $1m goes into the bank account and will then be married with $1m issued on the blockchain.”
Janine Grainger co-founded Easy Crypto with her brother Alan in 2018. It's transacted $2 billion in crypto sales since.
While she had no target for the amount of interest Easy Crypto could earn off the NZDD holdings, she said she planned to reinvest it through funding grants for other local cryptocurrency businesses.
“We want to get it [NZDD] to breakeven within the first couple of years and then, as it scales up, being able to distribute those funds back to the ecosystem is really important to us from a philosophical perspective.”
Eventually, the interest could be earned by investors.
“You earn money if you’re holding NZD in your bank account so you should also be able to earn money holding NZDD in a wallet.
“We haven’t got that product ready to launch, but that’s kind of longer term where I think would be really good to be able to give people back the value that we’re getting from holding those assets.”
Grainger’s company, which she co-founded with her brother Alan in 2018, is also launching a cryptocurrency wallet, allowing any crypto investor to hold 50 types of cryptocurrency independently in an app on a device, including Bitcoin and Ethereum.
If investors lose access to their app by losing their phone or forgetting their password, the wallet app allows them to use friends’ or family’s devices as a back-up means to access their holdings.
“Everyone’s heard of the horror stories of people who have lost access to their wallets and lock themselves out ... We really wanted to try to create, you know, an unlosable wallet.”
Easy Crypto would not earn any money off holdings in investors’ wallets, but the plan was to take it global.
Grainger hoped the wallet and New Zealand dollar stablecoin would make cryptocurrency trading more user-friendly and accessible, to her business’ benefit.
“The launch of not only one, but two, industry-shaping products is a proud moment for our team and one that we’re confident will continue to drive even broader uptake of crypto.”
Easy Crypto has to date transacted about $2b in total sales.
Madison Reidy is the host of New Zealand’s only financial markets show Markets with Madison. She joined the Herald in 2022 after working in investment, and has covered business and economics for television and radio broadcasters.
