NEW ZEALAND Law and Practice Contributed by: James Cochrane, Andrew Comer, Carlo Wan and Graeme Crombie, Lane Neave
FMA Sandbox See 1.1.2 Regulatory Sandbox . CARF Implementation
legal framework for secure and trusted digital iden- tity services. The regulations establish accreditation requirements for digital identity services, including criteria for assessment, record-keeping, and report- ing obligations. The framework aims to enhance trust and security in digital identity services. The regula- tions can impact on digital assets market participants in several ways: • identity verification – digital asset platforms may need to comply with accreditation standards for verifying user identities, ensuring secure transac- tions; • privacy and security – the framework enforces data protection rules, which could affect how digital asset providers handle customer information; • compliance and trust – accredited identity services could be required for KYC and AML compliance, which is crucial in digital asset markets; and • interoperability – the framework may encourage standardised identity solutions, making it easier for digital asset platforms to integrate with trusted identity providers. FMA Outcomes-Focused Regulation (Update) In March 2025 the FMA published an update regard- ing its approach to outcomes-focused regulation. This prioritises end results for consumers and markets over rigid compliance. Over the next few years, the FMA will refine its supervisory engagement, industry col- laboration and sector insights to enhance transpar- ency and fairness in financial services. The Financial Conduct Report, released in June 2025, was a major development which sets out the FMA’s regulatory pri- orities for the 2025/26 year and provides a more trans- parent view of conduct risks and supervisory priori- ties. This update is particularly relevant to blockchain and crypto-asset services, as the FMA has signalled increased scrutiny on the regulatory perimeter, which includes custody, funds administration, and wholesale financial products. FMA’s Perimeter and Response Team In 2025, the FMA introduced a dedicated team to assess activities at the edge of its regulatory scope, particularly concerning emerging technologies like blockchain. This team is responsible for determining whether certain activities fall within the FMA’s jurisdic-
See 1.1.1 Evolution of Uses of Blockchain . CARF has applied since 1 April 2026 and has introduced mandatory due diligence, data collection and report- ing requirements for New Zealand-based Reporting Crypto-Asset Service Providers. FMA Standard Conditions The FMA has proposed updates to standard condi- tions for derivatives issuer licences, including new leverage limits and suitability assessments for retail investors, aiming to align with international practices and strengthen investor protection. New leverage lim- its and suitability assessments may impact cryptocur- rency derivatives (eg, “perps”), as they are consid- ered highly volatile. The MBIE has also announced a phased capital markets reform plan, with Phase 2 hav- ing commenced in 2025, to address aspects such as takeover laws and product disclosure requirements. Again, disclosure requirements could affect crypto- related financial products and services. CoFI Regime The Conduct of Financial Institutions (CoFI) regime took effect on 31 March 2025, introducing conduct licensing requirements and a “fair conduct principle” for financial institutions. This may shape how finan- cial institutions handle crypto-assets. Furthermore, the RBNZ is implementing the Deposit Takers Act 2023, with consultations on prudential standards and the Depositor Compensation Scheme (DCS), which took effect on 1 July 2025. The DCS provides up to NZD100,000 of automatic protection in the event that a bank, credit union or finance company fails. Howev- er, financial information providers have indicated that traditional crypto-holdings are likely to fall outside this scheme because such asset purchases do not involve a deposit at a licensed deposit taker. Digital Identity Services Trust Framework Regulations The Digital Identity Services Trust Framework Regu- lations 2024 came into force on 24 October 2024. These regulations are part of the Digital Identity Ser- vices Trust Framework Act 2023, which provides a
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