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.
Exchanges issuing their own cryptocurrency to facilitate trading fall within the financial service category of ‘issuing and managing means of payment’.
Exchanges allowing cryptocurrency trading fall within the financial service category of ‘operating a value transfer service’.
If you allow trading of cryptocurrencies or tokens that are financial products under the FMC Act you need to consider whether you are operating a financial product market.
If you’re a wallet provider storing cryptocurrency or money on behalf of others, and you facilitate exchanges between cryptocurrencies or between money and cryptocurrencies, your services fall within the category of ‘operating a value transfer service’.
If you hold money for depositors you may be offering debt securities. However, if depositor funds are held in trust, your wallets may not be debt securities. Debt securities are financial products. They have additional regulatory requirements under the FMC Act.
If you arrange cryptocurrency transactions, you are providing the financial service of ‘operating a value transfer service’. If you provide transaction services in relation to cryptocurrencies or tokens that are financial products you may have obligations as a broker under the Financial Advisers Act 2008.
While each ICO must be looked at on an individual basis, most ICOs involve the financial service of ‘operating a value transfer service’. ICOs may also involve the financial service of ‘issuing and managing a means of payment’ – where the tokens can be used to obtain products or services that are otherwise acquired using legal tender (such as NZ dollars), for example. Often this applies when the ICO offers a ‘utility’ or ‘application’ token.
Read Inital coin offers to learn more.
If you provide a financial service you must:
In addition, if you are based in New Zealand, you must:
Anti-money laundering obligations may also apply.
See Fair dealing and inital coin offerings for more.
Given the bespoke nature of cryptocurrency-related financial services, we encourage you to approach us early about the services you plan to offer.
We are happy to discuss requirements with you and your legal advisers on an individual basis. Get in touch at: email@example.com
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