New Zealand’s Financial Regulator states all Cryptocurrencies are Securities
Not long ago, the New Zealand Financial Markets Authority, also known as the FMA, has published a commentary about initial coin offerings (ICOs) and digital currency services.
In its statements, the financial regulator declared that the economic substance alongside with a few characteristics can determine whether an ICO is a financial product or not. The report goes ahead and explains how ICOs can actually fall under the scope of managed investment products, debt securities, derivatives, equity securities and more, therefore companies holding these crowdfunding campaigns may have to fulfill certain regulatory requirements.
All tokens and digital currencies are securities
The agency went ahead and clarified that: “All tokens or cryptocurrencies are securities under the FMC Act [Financial Markets Conduct Act 2013] – even those that are not financial products. A security is any arrangement or facility that has, or is intended to have, the effect of a person making an investment or managing a financial risk.”
Not only this, but the regulator also mentioned that all businesses offering financial services related to digital currencies, such as wallets, brokers, and exchanges need to comply with the Financial Service Providers Act of 2008. In case a digital currency is not defined as a financial product, then businesses will need to comply with trade regulations, as per the Fair Trading Act.
The FMA also commented that at this time, most of the online exchanges operating in the region have no licenses and aren’t regulated, therefore if something goes wrong, investors will not be able to legally recover their investment capital.
However, these statements lead us to believe that New Zealand is not actually planning to work on any legislative framework for digital currencies and the related services anytime soon. Rather, some believe that the FMA wishes to inform the public that they take no responsibility whatsoever in case things go wrong.
SOURCE: https://themerkle.com/new-zealands-financial-regulator-states-all-cryptocurrencies-are-securities/
