RESEARCH: New Zealand Cryptocurrency and Digital Asset Securities Regulatory Requirements

Executive Summary

Cryptocurrency and digital asset securities in New Zealand are subject to a developing regulatory framework primarily overseen by the Financial Markets Authority (FMA). As of 2025‑2026, the legal landscape is characterized by a focus on investor protection, market integrity, and alignment with international standards such as the Financial Action Task Force (FATF). Licensing is required for entities that issue or trade securities classified as digital assets, with no known licensed entities as of the latest data. Practical reality indicates a cautious approach, with ongoing guidance and potential enforcement actions targeting non‑compliance. The tax treatment of crypto gains remains ambiguous, reflecting a gap in clear regulatory guidance.

Regulatory Framework

Regulatory Bodies

• Financial Markets Authority (FMA): Oversees the regulation of financial markets, including digital asset securities. Website: https://www.fma.govt.nz/
• Reserve Bank of New Zealand (RBNZ): Regulates certain payment systems and financial market infrastructures. Website: https://www.rbnz.govt.nz/
• Legislative Framework: Primary law governing financial markets is the Financial Markets Authority Act 2008 (amended by the Financial Market Infrastructures Act 2021). The Securities Regulations 2009 (https://www.legislation.govt.nz/secondary-legislation/pco-drafted/2009/230/en/latest/) further detail obligations for securities issuers.

Primary Laws

• Financial Markets Authority Act 2008 (Statute No. 2008/027, enacted 2008): Establishes the FMA’s mandate to regulate and supervise financial markets, including digital assets.
• Financial Market Infrastructures Act 2021 (Statute No. 2021/016, enacted 2021): Regulates designated financial market infrastructures (FMI), including payment systems and securities settlement systems, with the RBNZ and FMA jointly overseeing.
• Securities Regulations 2009: Specific regulations under the Financial Markets Authority Act that apply to securities offerings, including those involving digital assets.

International Standing

• New Zealand is a member of the Financial Action Task Force (FATF) and adheres to its recommendations on combating money laundering and terrorist financing, which extend to virtual asset service providers (VASPs). Website: https://www.fatf-gafi.org/

Licensing Requirements

Who Needs a License?

Entities that issue, trade, or provide custodial services for securities classified as digital assets must obtain a license from the FMA under the Financial Markets Authority Act 2008.

Activities Requiring Licensing

• Issuance of digital securities.
• Trading or brokering of digital securities.
• Custodial services for digital securities.

Capital Requirements

No explicit monetary thresholds are stipulated in the current legislation for digital asset securities licensing. The FMA assesses suitability based on the entity’s risk management framework and capital adequacy.

Application Process

1. Submit an application to the FMA detailing the entity’s business model, risk management practices, and compliance with FATF recommendations.
2. Provide evidence of robust anti-money laundering (AML) and counter‑terrorist financing (CTF) controls.
3. Demonstrate compliance with data protection and consumer protection standards.

Timeline and Structural Requirements

• Timeline: Processing typically takes 3–6 months, depending on the completeness of the application.
• Structural Requirements: Entities must have a clear governance structure, qualified personnel, and systems to ensure market integrity and investor protection.

Licensed Entities

As of the latest data, no entities have been licensed specifically for digital asset securities as of 2025‑2026. The FMA continues to evaluate applications on a case‑by‑case basis.

AML/KYC Requirements

• Customer Due Diligence (CDD): Conduct enhanced due diligence for high‑risk customers, including identity verification and source‑of‑funds checks.
• Enhanced Due Diligence (EDD): Required for customers with higher risk profiles, such as politically exposed persons (PEPs) or those engaging in large‑value transactions.
• Suspicious Transaction Reporting (STR): Obligation to report any suspicious activities to the FMA within 5 business days.
• Record Retention: Maintain records of CDD and EDD procedures for a minimum of 5 years.
• Beneficial Ownership: Identify and disclose beneficial ownership information for entities issuing digital securities.
• PEP Screening: Implement screening mechanisms to identify and manage risks associated with PEPs.

Enforcement Actions

• Penalties: Non‑compliance with FMA regulations can result in fines, cease‑and‑desist orders, or revocation of licenses.
• Recent Cases: Specific enforcement actions related to digital asset securities are not publicly documented as of the latest updates. However, the FMA has issued warnings and guidance to entities failing to meet AML/CFT standards.

Tax Treatment

• Capital Gains Tax: Gains from the sale of cryptocurrencies are treated as capital gains under the Income Tax Act 2007, subject to applicable rates.
• Income Tax: Profits from trading activities may be subject to income tax.
• VAT: Cryptocurrency transactions are generally not subject to value‑added tax (VAT) under current New Zealand law.
• Guidance Gap: No specific guidance from the Inland Revenue Department (IRD) directly addresses the tax treatment of digital asset securities, leaving room for interpretation.

Key Gaps & Risks

• Regulatory Clarity: The absence of explicit licensing thresholds and capital requirements for digital asset securities introduces uncertainty for market participants.
• International Alignment: While aligned with FATF recommendations, New Zealand’s regulatory framework for digital assets is still evolving, potentially leading to inconsistencies with other jurisdictions.
• Enforcement Consistency: Limited public disclosure of enforcement actions hampers transparency and may affect market confidence.
• Tax Ambiguity: Lack of clear tax guidance on digital asset securities could lead to compliance challenges and potential double taxation scenarios.

Sources

• New Zealand Government Securities Overview

• New Zealand debt securities

• New Zealand Government Securities Overview

• Securities Regulations 2009

• How we oversee FMI

• Financial Markets Authority: Home

• Financial Institution licensing

• Financial institution licensing FAQs

• Financial Action Task Force (FATF)

• Reserve Bank of New Zealand (RBNZ) – Financial Market Infrastructures

• Income Tax Act 2007