New Zealand should support crypto industry growth and take an evidence-based approach to regulating the sector, Minister for Commerce Andrew Bayly said in a government response to an inquiry by a lawmaker committee.

The response, which needs cabinet approval, addresses recommendations made by the Finance and Expenditure Committee in a report following an inquiry into the potential impact and risks posed by the industry.

"I propose that the Government response indicates that the Government wishes to support industry growth and will continue to proactively consider the recommendations made in the Inquiry," Bayly wrote in the response. "I also propose the response notes that the Government will monitor international developments and take an evidence-based approach to regulation."

The report also noted that the country's "wait and see" approach could risk New Zealand losing out on benefits stemming from industry developments, Bayly said. It takes the view that New Zealand "should take a more proactive and innovation-friendly approach to digital assets and blockchain (including cryptocurrencies)."

New Zealand's central bank has said it's not exploring crypto regulation.