How to hold an ICO in New Zealand?
What are the requirements for projects that want to work with cryptocurrency in New Zealand?
Is your crypto-project actively developing and is it time to enter new markets?
SBSB lawyers will provide you with qualified advice and help you understand all the intricacies of organizing a crypto project and holding an ICO in New Zealand.
Today New Zealand is a country that is called “crypto-friendly”, a country with a legislation that regulates activities related to cryptocurrencies and ICO, and this legislation is loyal compared to other jurisdictions.
In New Zealand, cryptocurrency was initially equated to virtual goods, such as software, e-books, video tutorials, or even a monthly subscription code for Netflix.
FMA1 press release regarding the status and regulation of ICO and cryptocurrency in New Zealand.
In November 2017, FMA issued a press release, where they answered the frequently asked questions of those wishing to hold an ICO in New Zealand and perform activities related to cryptocurrency in New Zealand.
FMA focused on the fact that the effect of regulatory features depends on whether this service or token is available to New Zealand citizens.
According to the FMA press release:
· Tokens and cryptocurrencies are equated to securities, even if they are not financial products, and are regulated by the Financial Markets Conduct Act
· A security is a mean or agreement that has, or will have in the future, an effect similar to a person making an investment or a financial risk manager.
Innovations in New Zealand legislation regarding cryptocurrency and ICO
The Law on Financial Markets (the reference to which was made by MFA in its press release in November 2017) distinguishes 4 types of financial products:
1. Managed investments - granting the authority to manage funds to another person, without actually transferring these funds;
2. manufacturing transactions;
3. shares - securities, with the right to share ownership of the company;
4. debt securities - securities, that give the right to return the money that were transferred in debt.
According to FMA representatives, existing projects related to ICO and cryptocurrencies can be classified as one of the financial products. And even if the project does not fall under the classification, it must comply with the requirements of the Fair Competition Act.
However, the FMA claims that in order to promote innovation and flexibility in the New Zealand financial sector, there may be exceptions for individual projects. And for this purpose, the Office calls for cooperation start-ups planning to hold an ICO, or engage in activities related to cryptocurrency.
Requirements for crypto-companies and ICOs in New Zealand
For crypto-projects (including cryptocurrency exchange platforms, private brokers and crypto-wallets), tokens issuers, as well as electronic payment systems, FMA highlighted the following requirements:
· registration in the dispute resolution system;
· registration in the Register of financial service providers (for each type of service, registration is made separately);
· payment of fees and commissions;
· compliance with the Law on Financial Markets;
· compliance with anti-money laundering legislation (AML), as well as measures to combat the financing of terrorism (CFT).
Please note that in order to hold an ICO in New Zealand, unlike crowdfunding, no special license is required.
FMA recommendations for investors to reduce risks when investing in ICO and cryptocurrency:
For investors from New Zealand, FMA made an individual warning stating that the price of cryptocurrency is volatile, tokens can be stolen, and cryptocurrency is not accepted for payment everywhere.
To reduce the risks, FMA advises to make sure that the cryptocurrency platform, the services of which the investor plans to use, is:
· registered in New Zealand;
· part of the dispute resolution structure;
· published on the website an explanation of the methods of conducting transactions and storing fiat funds, as well as ways of returning funds;
FMA also advises investors to use only those transaction methods where an investor can get access to the history of completed transactions, and, if necessary, obtain a proof of sending or receiving funds.
As you can see, the regulator of New Zealand has already decided on the regulation of ICO and projects in the field of cryptocurrency, which makes New Zealand an attractive jurisdiction for this kind of activity.
SBSB lawyers have many years of experience in supporting crypto-projects, as well as projects that plan to bring the company to ICO and STO, including in New Zealand.
We will be happy to provide you with quality advice and help to deal with the intricacies of business organization in New Zealand.
1FMA - Financial Market Authority