The New Zealand Financial Markets Authority (FMA), and agency specializing in financial regulations, has finally broken its silence regarding their guidelines on cryptocurrency activities and initial coin offerings (ICOs). The FMA released a statement last week in which they conveyed the manner in which the country intends to regulate activities, such as token sales. The most noteworthy aspect of the statement was that the FMA would categorize all cryptocurrencies, or any derivatives thereof, as a financial security.
The FMA confirmed that all ICO tokens or cryptocurrencies would be viewed as securities as per the Financial Markets Conduct Act of 2013. This included all cryptocurrency-related products that are not necessarily specific to finance. Here, a security is defined as an arrangement which would allow an individual to invest or manage a specific financial risk.
Following the definition, the FMA explained that all tokens would be divided into four different categories including, debt securities, managed investment products, equity securities, or derivatives. The tokens would be sorted based on their specific features. Despite the firm definitions, the FMA left some room for ambiguity in terms of the exact classification of ICOs, especially when it involves technology which influences token sales and issuing. The FMA also reserved the right to designate certain securities to function as a specific financial product, depending on its economic features.
The statement also included guidelines for businesses actively engaged with blockchain-related products. All major cryptocurrency-related services, including ewallets, brokers, and exchange platforms, will be categorized accordingly. Companies would also be required to be registered and comply with the necessary imposed guidelines. However, companies that meet certain criteria may receive an exemption in certain financial legislative issues, so as to encourage the industry’s growth in the country.
According to the statement, the FMC Act allows the FMA to grant extensions to certain financial services providers. The FMA stated that they would do so if the circumstances would serve a greater purpose to benefit cryptocurrency and ICO activity.
Since the release of the statement, an FMC spokesperson stated that the FMA was attempting to reach a balance between market oversight and stimulating innovation in the industry. The spokesperson concluded that the agency’s goal was to encourage the industry, while at the same protecting New Zealand users and trying to maintain a stable cryptocurrency market.
The FMA confirmed that all ICO tokens or cryptocurrencies would be viewed as securities as per the Financial Markets Conduct Act of 2013. This included all cryptocurrency-related products that are not necessarily specific to finance. Here, a security is defined as an arrangement which would allow an individual to invest or manage a specific financial risk.
Following the definition, the FMA explained that all tokens would be divided into four different categories including, debt securities, managed investment products, equity securities, or derivatives. The tokens would be sorted based on their specific features. Despite the firm definitions, the FMA left some room for ambiguity in terms of the exact classification of ICOs, especially when it involves technology which influences token sales and issuing. The FMA also reserved the right to designate certain securities to function as a specific financial product, depending on its economic features.
The statement also included guidelines for businesses actively engaged with blockchain-related products. All major cryptocurrency-related services, including ewallets, brokers, and exchange platforms, will be categorized accordingly. Companies would also be required to be registered and comply with the necessary imposed guidelines. However, companies that meet certain criteria may receive an exemption in certain financial legislative issues, so as to encourage the industry’s growth in the country.
According to the statement, the FMC Act allows the FMA to grant extensions to certain financial services providers. The FMA stated that they would do so if the circumstances would serve a greater purpose to benefit cryptocurrency and ICO activity.
Since the release of the statement, an FMC spokesperson stated that the FMA was attempting to reach a balance between market oversight and stimulating innovation in the industry. The spokesperson concluded that the agency’s goal was to encourage the industry, while at the same protecting New Zealand users and trying to maintain a stable cryptocurrency market.