Cryptocurrencies

Initial coin offers

Initial coin offers (ICOs) and token events are a form of fundraising where you receive tokens that carry certain rights, such as providing access to a new product or service, or an interest in an underlying asset or project.

How an ICO is regulated depends whether:

• the token you are offering is a ‘financial product’ (this will depend on the specific characteristics and economic substance of that token)
• you are providing a ‘financial service’ (this will depend on the specific structure and features of the ICO) 
• the person buying the token is a member of the general public (known as a ‘retail investor’) or a very experienced investor (known as a ‘wholesale investor’) 
• the investor is based in New Zealand or overseas.

Cryptocurrency services

Cryptocurrencies are digital tokens available online via exchanges, initial coin offers (ICOs) and token events.

If you provide a ‘financial service’ related to cryptocurrencies in New Zealand, you need to comply with the ‘fair dealing’ requirements in the Financial Markets Conduct Act 2013 (FMC Act). The Financial Service Providers (Registration and Dispute Resolution) Act 2008 and anti-money laundering obligations may also apply. Key activities considered ‘financial services’ include exchanges, wallets, deposits, broking and ICOs.

Fair dealing and initial coin offers

The fair dealing requirements in Part 2 of the Financial Markets Conduct Act 2013 (FMC Act) are broad principles that prohibit misleading or deceptive conduct, false or misleading representations and unsubstantiated representations.