Establish a strategic Bitcoin reserve for Aotearoa New Zealand

What is a Strategic Bitcoin Reserve?

A strategic reserve is a stockpile of assets held by a government to protect its economy. In this context, the petition asks New Zealand to buy and hold Bitcoin. Bitcoin is a digital currency that runs on a public ledger called a blockchain. It is not controlled by any single bank or government. Its supply is limited to 21 million coins, which supporters argue makes it a "scarce" asset, similar to gold, rather than a currency that can be printed infinitely.

Current Situation in New Zealand

Currently, the New Zealand Government does not hold Bitcoin as part of its official reserves. The country’s financial reserves are primarily held in traditional currencies like the US Dollar and Euro, and in gold. This petition is part of a global trend where some nations and US states have begun exploring or adopting digital asset reserves. The petitioner argues that New Zealand is lagging behind in diversifying its national savings to protect against inflation and currency devaluation.

Arguments in Favour

• Diversification: Holding Bitcoin would spread risk across different asset classes, potentially reducing reliance on traditional fiat currencies.
• Inflation Hedge: Because Bitcoin’s supply is fixed by code, supporters believe it protects wealth from the effects of inflation, which can erode the value of traditional savings.
• Global Trend: The petition notes that other jurisdictions are adopting similar strategies, suggesting New Zealand should align with international economic shifts to maintain competitiveness.

Arguments Against

• Volatility: Bitcoin prices can swing dramatically in short periods. Holding such an asset could expose the national treasury to significant financial losses.
• Regulatory and Legal Issues: New Zealand’s existing financial laws, including the Reserve Bank of New Zealand Act 1989, are designed for traditional currencies. Integrating Bitcoin would require complex legal changes and raises questions about the Reserve Bank’s mandate.
• Environmental and Security Concerns: Bitcoin mining is energy-intensive. Additionally, storing large amounts of digital assets requires advanced cybersecurity measures to prevent theft or loss.

Relevant Context

The Reserve Bank of New Zealand is the central bank responsible for managing the country’s monetary policy and foreign exchange reserves. Any change to what assets the government holds would likely require legislative approval from Parliament. While New Zealand has a robust regulatory framework for cryptocurrencies for private citizens (managed by the Financial Markets Authority), there is no current legal framework for the state to hold Bitcoin as a strategic reserve. This petition is a call for the House of Representatives to urge the Government to consider such a policy shift.

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