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Future Regulation Model? New Zealand Deems All Crypto As Securities

New Zealand’s main financial regulatory body—the Financial Markets Authority (FMA)—just announced all cryptocurrencies and crypto-tokens will henceforth be considered as securities in the nation.

If nothing else, the move brings clarity for New Zealand crypto users who’ve been awaiting legal guidance on how to account for their crypto investments.

Notably, The FMA said Initial Coin Offerings (ICOs) will fall under a simple regulatory parameter—if New Zealanders have access to them, then the FMA will regulate the interaction:

“[…] the extent to which an ICO is regulated depends on whether a “financial product” is being offered to retail investors in New Zealand.”

New Zealand’s 2013 Financial Markets Conduct Act will likewise necessitate the FMA slot ICOs into one of four securities categories:

  • equity securities
  • debt securities
  • derivatives
  • managed-investment products

Indeed, this FMC Act was staked as the guiding legislative logic underlying the FMA’s crypto-as-securities announcement, and the agency declared as much in its statement on its decision:

“All tokens or cryptocurrencies are securities under the FMC Act – even those that are not financial products. A security is any arrangement or facility that has, or is intended to have, the effect of a person making an investment or managing a financial risk.”

New rules for crypto space

The FMA’s decision will mandate that companies providing crypto services in New Zealand play by a new set of regulatory rules.

This means all crypto companies operating in New Zealand, from hardware wallet providers to exchanges, will have to be compliant with the following demands:

  • adhere to all domestic money laundering laws
  • adhere to FMC Act’s fair-dealing provisions
  • register for the Financial Service Providers Register in the relevant category
  • if a provider of financial services, register as a member of a dispute-resolution system

A securities model for other nations?

The big question now is whether or not other nations will follow New Zealand’s lead in categorizing cryptocurrencies the same way.

Hong Kong, for one, is leaning toward slotting all ICOs as securities too.

But some experts in the field don’t think things like Ethereum’s ether should be considered a security—others disagree.

We’ll have to wait and see whether nuance or blanket regulations win out.

TLDR: New Zealand’s Financial Markets Authority just ruled all crypto will be considered as “securities” in the nation. This could inspire other nations to do the same. 

William M. Peaster is a cryptocurrency journalist and copy-editor based out of El Paso, Texas. He's an avid fan of Ethereum, ERC-20 tokens, and smart contracts in general.

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