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