NEW ZEALAND Law and Practice Contributed by: James Cochrane, Andrew Comer, Carlo Wan and Graeme Crombie, Lane Neave
2.2 Crypto-Asset Regulatory Frameworks Characterisation and Classification of Crypto- Assets New Zealand has not adopted a formal token classifi- cation framework but instead applies existing regula- tory frameworks to crypto-assets. Specifically, the FMA assesses crypto-assets on a case-by-case basis, based on their features and func- tions, to determine whether they qualify as “financial products” under the FMC Act. The four categories of financial product under the FMC Act are as follows. • Debt securities – A crypto-asset may be a debt security if investors have a right to be repaid money or paid interest by a person, company, or unincorporated entity making a crypto-asset offer. • Equity securities – A crypto-asset is considered to be an equity security in New Zealand if investors buy, or have the option to buy, a share in a New Zealand incorporated company or a body corpo- rate incorporated outside New Zealand. A crypto- asset that provides an option to buy a share is an offer of both the crypto-asset and the equity share. • Managed investment products – A managed investment scheme (MIS) is an arrangement whereby funds are pooled by a number of investors and then managed and invested by an investment manager. A crypto project may be an MIS if it pools contributions, gives investors a right to financial benefits (eg, profit or additional crypto-assets), and does not give investors day-to-day control. • Derivatives – A crypto-asset may be considered a derivative if either the issuer or holder is or may be required to pay an amount in the future, with such amount being derived from the value of an underly- ing asset. Those leading, operating or controlling crypto pro- jects may also be considered “financial service pro- viders” under New Zealand law. “Financial services” are defined by the FMC Act and FSP Act and cover a broad range of services. Common services which are captured within this definition include exchanges, wal- lets, managers of an MIS, safekeeping and adminis- trative services, and operating value transfer services.
If a project is deemed to provide a financial service, it may be required to register as a financial service provider and be a member of a dispute resolution scheme. These services would also require compli- ance with relevant regulations to ensure consumer protection and adherence to AML requirements. The following crypto-asset activities are regulated under existing regimes. • Crypto‑asset offers and issuances are regulated where the token or coin constitutes a “financial product” under the FMC Act. If an initial coin offer- ing or token sale results in an instrument that is a debt security, equity security, managed investment product or derivative, the FMC Act’s disclosure, governance and (in many cases) licensing obliga- tions apply to the offeror. • Crypto‑linked derivatives and structured products – options, futures and other derivatives instruments referenced to crypto-assets are regulated products under the FMC Act. Any person making a regulated offer of such derivatives to the public must hold a derivatives issuer licence from the FMA. • Crypto-asset service providers operating a plat- form/providing a “financial service” related to cryp- to-assets in New Zealand, must comply with the applicable requirements of the FMC Act (including fair dealing provisions), the AML/CFT Act, and the FSP Act. • AML/CFT obligations – crypto-exchanges, brokers, custodians, and other virtual asset transfer ser- vices are classified as “reporting entities” under the AML/CFT Act. They must conduct customer due diligence (CDD), undertake ongoing transaction monitoring, and file suspicious activity reports and prescribed transaction reports with the Financial Intelligence Unit. • FSP registration and dispute resolution – those providing “financial services” to the New Zealand public generally must register on the Financial Ser- vice Providers Register (FSPR) and (for retail) join an approved dispute‑resolution scheme. Prohibited activities and products • Operating crypto ATMs – this was banned in New Zealand from July 2025. The prohibition was part of a reform of New Zealand’s anti-money launder-
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