The New Zealand Financial Markets Authority, which is the country’s finance regulator, has released new guidance on the ICOs and cryptocurrencies.
The New Zealand Financial Markets Authority (FMA) which is the country’s finance regulator has released new guidance on the Initial Coin Offerings (ICOs) and cryptocurrencies. In a statement that was released last week FMA outlined the different ways in which token sales would be effectively covered under the national law. In the statement that was released last week the regulator categorically stated that any ICO derived token and cryptocurrency would be considered as a security. The regulator further said that all cryptocurrencies or tokens are securities as per the Financial Markets Conduct Act of 2013. These include the ones that are not financial products. The FMA further stated that a security is any arrangement or facility which has or is intended to have the effect of a person making an investment or managing a financial risk.
FMA cited the law and stated that tokes can fall into any of the four financial products categories debt securities, management investment products, derivatives or equity securities depending on their specific characteristics. With this in mind the FMA left the door open to more classifications for such offering through which technology could be applied to bootstrap a blockchain network through the sale of release tokens. The regulator further stated that it can designate any security to be a particular financial product mainly based on its economic substance. For instance; a project token that is giving investors shares and voting rights in a company including its profits can be a designated equity security.
Guidelines for Startups
This statement released by FMA also included guidance for businesses working with the technology. The major cryptocurrencies services such as brokers, exchanges and wallets the FMA argues that it does not have a specific category for these particular services. Consequently, such companies are required to be registered appropriately. In addition the agency suggested that it can provide some exceptions from the current laws to companies with an objective of promoting flexibility and innovation. The agency stated that it can also grant exemptions to make sure the FMC Act are fit for the purpose of ICOs. A representative from the FMC said that the regulator was looking to strike the appropriate balance between market oversight and allowing for new kinds of services and products to take shape. The representative further added that the agency has an objective of encouraging responsible innovation, balancing innovation against protection of the consumer and making sure that the regulatory regime is able to remain agile and relevant.