Highlights of the past 12 months in the blockchain market in New Zealand include:

• Ministry of Business, Innovation & Employment (MBIE) Long-Term Insights Briefing on the Future of Business for Aotearoa New Zealand (the “MBIE Briefing Paper”);
• Report of the Finance and Expenditure Committee (FEC), August 2023 (the “FEC Report”);
• Government Response to FEC Report, 10 April 2024 (the “Government Response”);
• Reserve Bank of New Zealand – Te Pūtea Matua (RBNZ) Future of Money;
• NZDD stablecoin;
• Dasset exchange insolvency;
• Cryptopia insolvency case developments;
• Financial Market Infrastructures Act 2021 (FMI Act) Standards, July 2023 (the “FMI Standards”); and
• Financial Markets Authority (FMA) regulatory sandbox.

During the past year, NZ’s blockchain market has seen significant activity. These efforts emphasise blockchain’s potential to transform the economy and create high-value jobs.

MBIE Briefing Paper

Building on its earlier positions, the Ministry of Business, Innovation and Employment (MBIE) has signalled continued interest in blockchain’s role in transforming public and private sector operations. While no new formal policy paper has been released in the last 12 months, government commentary has reinforced blockchain’s potential in supply chain integrity, digital identity and verifiable data management – especially in agriculture and health services.

FEC Report and Regulatory Process

The government has begun initial implementation of select recommendations from the Finance and Expenditure Committee (FEC) Report. While a comprehensive regulatory framework for crypto-assets has not yet been legislated, 2024 saw more formal engagement between industry participants and the Financial Markets Authority (FMA), signalling an intent to bring crypto-asset platforms under tighter oversight.

Key priorities include:

• establishing clearer licensing requirements for exchanges;
• strengthening consumer protection provisions under financial services law; and
• increasing regulatory interoperability with global standards.

RBNZ Future of Money

The Reserve Bank of New Zealand (RBNZ) continued its exploration of a central bank digital currency (CBDC). In late 2024, it released a technical update outlining preliminary design principles for a “digital cash” prototype, aiming to balance innovation with privacy and monetary stability. Stakeholder consultation is ongoing.

In December 2024, the RBNZ reported that the consultation process attracted the highest response it has ever received. The key findings were that Kiwis say cash and privacy are crucial. Ninety per cent of respondents were concerned that introducing a CBDC would result in their spending being monitored or controlled. Significant percentages were worried about losing access to cash and privacy more generally. Businesses, fintechs, financial service providers and charities were supportive of the RBNZ’s reasons for exploring digital cash. The RBNZ will continue to work with the government to decide whether to introduce digital cash. The earliest it would be introduced is 2030.

Separately, the RBNZ’s monitoring of stablecoins has intensified, especially with the operational progress of New Zealand dollar-backed stablecoins like NZDD and NZDs. It is hoped that the RBNZ will publish a dedicated policy position on privately issued stablecoins in the near future.

Enforcement and Market Integrity

Dasset insolvency and SFO investigation

The Serious Fraud Office (SFO), NZ’s lead law enforcement agency for investigating and prosecuting serious financial crime, continued its investigation into Dasset into 2025. The crypto-asset exchange collapsed in August 2023, leaving NZD6.3 million in cryptocurrency unaccounted for. As of April, the SFO has not filed charges, but it is anticipated that the probe includes both corporate governance failures and potential criminal breaches. Dasset’s liquidators are still attempting to recover assets, with creditors unlikely to be made whole. They have recently applied for directions regarding the status of assets and to be able to convert crypto to cash to meet the costs of liquidation. The case has prompted calls for regulations to ensure transparency, security and accountability, including mandatory segregation of customer funds by crypto exchanges. The discrepancy in Dasset’s holdings reflects a broader issue of insufficient oversight.

Cryptopia developments

The Cryptopia liquidation also saw new developments in late 2024, with the High Court approving partial asset distributions to certain account holders. In December 2024 some 10,000 account holders received NZD400 million in cryptocurrency. A possible additional top-up distribution has also been foreshadowed. This marked a significant legal precedent for digital asset recoveries under NZ insolvency law, providing guidance for future cases.

Stablecoin Growth and Innovation

Easy Crypto’s NZDD stablecoin saw limited but steady growth in 2024, used mostly within local fintech platforms and for remittance use cases. Techemynt’s NZDS remains active in institutional circles. While adoption is still modest, it is understood that both initiatives are closely monitored by regulators and are likely to serve as testbeds for digital payment innovation under RBNZ oversight.

Key Issues Impacting the NZ Blockchain Market in the Next 12 Months

• Legislative reform – Deliberations on a comprehensive crypto-asset framework, as recommended by the FEC, will likely advance, impacting platform licensing, custodial rules and investor protections.
• CBDC development – RBNZ’s digital currency pilot will be a focal point of public and political interest, raising questions about privacy, interoperability and sector disruption.
• Enforcement actions – The outcome of the ongoing Dasset and Cryptopia insolvencies will shape compliance expectations for local crypto businesses.
• Industry consolidation – Increased compliance costs and declining speculative activity may lead to consolidation among smaller exchanges and “Virtual Asset Services Providers” (VASPs).

Impact of FTX and Other Failures

The fallout from FTX, Dasset and other insolvencies has deeply influenced New Zealand’s regulatory approach. While direct exposure to FTX in NZ appears limited, the revelation of Dasset’s Alameda-linked partner has heightened awareness of global interconnections and risks. Regulators are now emphasising due diligence on international counterparties and the need for fit-and-proper checks for platform operators.

The FMA, Commerce Commission, DIA and RBNZ have all signalled more co-ordinated oversight. The Government Response to the FEC Report (paragraph 16) highlights systemic risk mitigation and consumer safeguarding as top priorities going forward.

FMI Standards

Over the past year, New Zealand has advanced the implementation of its Financial Market Infrastructure (FMI) Standards, which came into effect on 1 March 2024. These standards, applicable to designated FMIs including certain crypto-asset platforms, enhance oversight and align with international principles. Key developments include the introduction of FMI Standard 17C on cyber-resilience, new incident reporting obligations from the RBNZ, and updated licence conditions from the FMA requiring robust continuity planning and rapid reporting of critical failures. The frequency of FMI self-assessments is also increasing. In the year ahead, these standards – alongside the upcoming OECD Crypto-Asset Reporting Framework – will significantly shape the regulatory landscape, reflecting a measured response to global events like the FTX collapse and a growing focus on resilience and consumer protection.

FMA Sandbox

In December 2024, the FMA announced it was launching a pilot “regulatory sandbox” for 2025. A regulatory sandbox is a concept that allows firms to test innovative products, services or business models. An initial pilot phase will run from January to July 2025, with a decision on the need for a permanent FMA regulatory sandbox to be made later in the year. The sandbox is open to more than just regulated financial services and includes Web3 and blockchain projects.

It represents a significant advancement for New Zealand market participants. The FMA’s announcement notes the following.

• Sandboxes can help spur innovation by allowing both start-ups and established licensed financial institutions to test new products and services in a controlled environment.
• Firms can test their systems in a monitored space, allowing them to obtain a deeper understanding of supervisory expectations. The opportunity to adjust a product or service before full commercial launch may help reduce costs for firms.
• In return, the FMA has the chance to gain greater insights into the benefits and risks of financial innovation and new technologies. By first testing a product or service in a regulatory sandbox, participants should be able to better assess the viability of innovative products and services.
• Experiences gained through such a testing phase should allow the FMA to react faster and more effectively to regulatory and supervisory problems. It should also highlight gaps around investor and customer protection, allowing development of more appropriate and timely solutions.

Acquisition of Easy Crypto

In March 2025, Australian crypto exchange Swyftx acquired New Zealand’s largest crypto platform EasyCrypto, suggesting increased interest in the local blockchain and crypto market. Easy Crypto published consumer data which shows strong increasing demand for crypto in New Zealand. The study undertaken by Protocol Theory found that nearly half of the Kiwi population now see cryptocurrency as a viable alternative to traditional home ownership for building financial freedom.

Real World Asset Tokenisation

The tokenisation of real world assets (RWA), especially real estate, is gathering momentum in New Zealand. Local industry group, BlockchainNZ, noted its involvement in a number of (confidential) projects.

New Zealand’s blockchain sector has continued to grow steadily, with increased adoption across consumer and business markets.

Key players like Easy Crypto and VeVe expanded services in crypto trading and NFTs, while Immersve deepened its Web3 payments integration with Mastercard. Māori-led project Ahau advanced digital sovereignty using decentralised tools, and infrastructure providers like SubQuery and OnFinality supported broader blockchain development.

While tokenised financial instruments remain in early stages, interest is rising, especially in relation to evolving government bond strategies. The enterprise space also saw activity from firms like Blockchainlabs.nz, as government agencies recognised blockchain’s potential in areas like supply chain transparency. Overall, momentum continues to build across permissioned and permissionless networks, with both public and private sectors contributing to innovation.

In New Zealand, the ownership and transfer of digital assets via blockchain networks are governed by traditional common law and equitable property principles, adapted to the unique characteristics of digital assets and blockchain technology.

The landmark case of Ruscoe v Cryptopia Ltd (in liquidation) [2020] NZHC 728 established that cryptocurrencies are a form of intangible personal property capable of being held on trust. The High Court held that Cryptopia, a cryptocurrency exchange, held digital assets on trust for its account holders, rather than as company assets. This decision affirmed that control over a digital asset – akin to possession in common law – is linked to the possession of the private cryptographic key, emphasising that control and the ability to exclude others are key elements of property ownership.

Subsequent developments have further clarified the legal treatment of digital assets. In March 2024, the High Court approved the liquidators’ proposed method for distributing assets to Cryptopia’s account holders. This process involved verifying account holders’ identities, confirming balances and collecting wallet addresses for asset distribution. Notably, the Court recognised that transactions involving changes in beneficial ownership, recorded only on internal ledgers and not on the blockchain, still constituted valid transfers under trust law.

Regarding the finality of digital asset transfers via blockchain networks, such transfers are considered final when the transaction is confirmed and recorded on the blockchain, and the recipient gains control over the asset through their private key. However, in cases involving intermediaries, such as exchanges or custodians, traditional equitable principles may apply. The intermediary may hold the digital asset on behalf of the owner, creating a trust relationship. Equitable remedies, such as tracing, can apply if assets are misappropriated or wrongly transferred, enabling owners to follow and potentially recover those assets, provided the recipient’s public address can be identified.

These developments underscore the adaptability of New Zealand’s legal system in addressing the complexities of digital assets, ensuring that ownership and transfer principles remain robust in the evolving landscape of blockchain technology.

In New Zealand, the classification of digital assets – such as security tokens, utility tokens, exchange tokens and stablecoins – is determined by their specific features and functions, rather than their labels. This approach aligns with the Financial Markets Conduct Act 2013 (FMCA), under which the Financial Markets Authority (FMA) assesses whether a digital asset qualifies as a “financial product” or “financial service”. Categories under the FMCA include debt securities, equity securities, managed investment products, and derivatives. The FMA also has the authority to designate certain digital assets as financial products, though not retrospectively.

For taxation purposes, the Inland Revenue (IRD) treats crypto-assets as a form of property. The tax implications depend on the asset’s characteristics and intended use, not on its name. For instance, exchanging one crypto-asset for another is generally considered a taxable event. The IRD has also proposed a token classification framework for taxation in its guidance.

While New Zealand has not adopted a formal token classification framework like Australia’s Treasury Token Mapping Consultation Paper (February 2023) (the “Token Mapping Paper”), it benefits from the comprehensive work already done in Australia. The government has indicated that it will continue to monitor international developments and provide consistent guidance on how existing legislation applies to digital assets.

FMCA/FSP Act Categorisations

The key categorisation for regulatory purposes is whether crypto-assets or related services are “financial products”, “financial advice products” or “financial services” under New Zealand’s primary financial markets statute, the FMCA. The FMA is the regulator responsible for the FMCA.

“Financial products” include:

• debt securities (eg, instruments acknowledging debt);
• equity securities (eg, shares in a company or scheme interests);
• managed investment products (eg, interests in a managed investment scheme (MIS));
• derivatives (eg, contracts based on the value of an underlying asset).

The classification depends on the asset’s features and functions.

“Financial advice products” include:

• the above-mentioned financial products;
• a discretionary investment management service (DIMS);
• contracts of insurance;
• consumer credit contracts; and
• any other product declared by the regulations to be a financial advice product.

The FMA also has the ability (albeit not retrospectively) to designate a “security” as one of the classes of financial product. A “security” is an arrangement or a facility that has, or is intended to have, the effect of a person making an investment or managing a financial risk. This test is similar to that in the US for “investment contracts” known as the “Howey test”.

The FEC Advisers Report comprehensively discusses financial products and financial advice products. It notes that unless the FMA has designated crypto-assets into a class of financial products, many of the FMCA rules will not apply if the crypto-assets do not meet one of the defined classes.

FMA guidance also details requirements for crypto-assets and associated services that are financial products (eg, requirements to register a product disclosure statement, meet fair dealing requirements, appoint a licensed supervisor).

As discussed in 4.1.4 Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Requirements, the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the “AML/CFT Act”) and the Financial Services Providers (Registration and Dispute Resolution) Act 2008 (the “FSP Act”) may apply to crypto-assets market participants if the entity is a “virtual asset service provider” (VASP) and/or provides services that constitute “financial services”. These are also discussed in the FEC Advisers Report.

New Zealand’s financial markets regulatory regime is comparable to Australia’s. As discussed elsewhere in this paper (eg, the cases discussed in 3.1 Enforceability), regulators in both countries are grappling with the applicability of the existing regimes to crypto-assets.

In summary, determining the appropriate categorisation of digital assets in New Zealand involves analysing the asset’s specific characteristics and functions within the existing legal frameworks provided by the FMCA and IRD guidelines. Market participants are encouraged to consult with legal and tax professionals to navigate the complexities of digital asset classification and compliance.

In New Zealand, the legal and regulatory characterisation of tokenised securities – traditional financial instruments represented digitally on a blockchain – is primarily governed by the FMCA. The FMA assesses digital assets based on their features and functions, rather than their labels, to determine if they qualify as “financial products”.

The following are noted in FMA guidance.

• A crypto-asset is considered an equity security if it provides investors with rights akin to shares in a New Zealand incorporated company.
• A crypto-asset linked to a commodity may be classified as a debt security if investors can purchase it with money, have the right to redeem it for money, and are not the beneficial owners of the funds from which redemption proceeds are paid. However, if the asset token can be exchanged directly for the underlying asset, it is less likely to be deemed a debt security.
• “Utility tokens”, also known as “application tokens”, are generally not considered managed investment products. Nevertheless, depending on the project’s nature, certain offerings, such as those involving non-fungible tokens (NFTs), could potentially be classified as managed investment schemes.
• A crypto-asset may be categorised as a derivative if it involves the obligation to pay an amount or provide something else in the future, with its value derived from an underlying asset or commodity.

The IRD guidance notes that crypto-assets representing existing property or financial assets – mirroring traditional securities like shares or debt – are often referred to as “security tokens” or “asset tokens.” Such crypto-assets could be classified as financial products under the FMCA.

While New Zealand has not adopted a formal token classification framework akin to Australia’s token mapping initiative, the FMA emphasises the importance of evaluating each digital asset’s specific characteristics and economic substance. Market participants are encouraged to engage with the FMA early in the development phase of any token offering to determine the appropriate regulatory treatment and ensure compliance with applicable laws.

One of the main criticisms of crypto-assets are that they are inherently volatile. “Stablecoins” are a type of crypto-asset designed to maintain a stable value. However, they achieve this stability through different methods. There are two main types of stablecoins:

• asset-backed stablecoins; and
• non-asset-backed (seigniorage) stablecoins.

Asset-backed stablecoins can be backed by fiat, other crypto-assets or commodities. Non-asset-backed stablecoins, by comparison, utilise algorithms and smart contracts to manage supply and are usually not backed by physical reserves (and are often referred to as “algorithmic stablecoins”).

In New Zealand, distinctions between these types are important for regulatory and risk management purposes.

FMA Guidance

FMA guidance notes that crypto-assets backed by assets that give investors a right to redeem the token in exchange for the asset are not considered debt securities (unless the asset is cash). This is because the crypto-asset typically does not give an investor the right to be repaid “money”.

However, a crypto-asset linked to the value of a dollar or commodity could be a debt security if:

• investors can purchase it with money;
• investors holding it have the right to redeem it for money; and
• an investor holding it is not the beneficial owner of funds from which redemption proceeds are paid.

Although the crypto-assets themselves may not be classified as a financial product, offering, for example, asset-backed tokens through an initial coin offering (ICO) could constitute a financial service and so be subject to the FMCA and the FSP Act.

Specifically, FMA guidance suggests that stablecoins could be “financial products”, placing them within the jurisdiction of the FMA. The FMA assesses each stablecoin on a case-by-case basis. As with asset tokens, key considerations for whether a stablecoin is a financial product include the ability to purchase the stablecoin with money, the right to redeem that stablecoin for money, and whether someone holding the stablecoin is the beneficial owner of funds from which redemption proceeds are paid. No specific distinction is made between a fiat-backed stablecoin or an algorithmic stablecoin.

Privately issued NZ fiat stablecoin examples, NZDS and NZDD, arediscussed in 1.1 Evolution of the Blockchain Market.

FMI Act

Stablecoins which are part of payment systems may fall within the FMI Act, but as yet none have been designated as “systemically important” under that Act.

RBNZ Digital Cash

As discussed in 1.1 Evolution of the Blockchain Market, RBNZ is considering a “digital cash” CBDC. It is unclear what form this “electronic version of cash” will take but it could potentially be a government-/central-bank issued stablecoin. That said, the RBNZ has expressed scepticism regarding stablecoins, with former Governor Adrian Orr referring to them as “oxymorons” and questioning their stability.

There are currently no specific legislative rules for NFTs. As such, market participants and regulators tend to rely on general principles under tax and financial services law.

As to the legal characterisation of NFTs, while it is possible that NFTs could be categorised as “financial products” and services in relation to them as “financial advice products” and “financial services” subject to the FMCA and the FSP Act, most FMA guidance suggests that NFTs may not be financial products and, therefore, carry risks because they are not regulated as such.

Curiously, IRD guidance suggests that NFTs are “like crypto-assets” but “are not the same as crypto-assets”. In terms of taxation, NFTs are classified as a service for GST (goods and services tax). In contrast, most fungible crypto-assets are not subject to GST when bought or sold.

From April 2024 to May 2025, there have been no legislative amendments or formal reclassification of NFTs under the FMA or the FSP Act. The FMA has not issued specific guidance on NFTs during this period but continues to take a substance-over-form approach, meaning NFTs could be considered “financial products” where they function like securities, derivatives or managed investment products.

While NFTs representing digital art or collectibles are generally not considered financial products, those offering embedded rights – such as access, royalties, or income streams – may have mixed tax treatment depending on the nature and use of the asset and could, in theory, also be classified as financial products or financial services.

NFTs can be used for personal enjoyment (eg, collectibles), in which case disposal may not be taxable. However, if NFTs are acquired with the purpose of resale or as part of a profit-making scheme, then resulting profit could be taxable (or claimable if a loss).

NFTs used in gaming contexts are subject to normal income tax rules depending on whether they are held on capital or revenue account. It is anticipated that fractionalised NFTs would garner increased regulatory scrutiny given FMA guidance that schemes offering fractional ownership could fall within the scope of regulated financial products, such as managed investment products or derivatives.

While there is growing industry demand for clearer regulatory treatment of NFTs, particularly hybrid or investment-linked tokens, New Zealand regulators have continued to take a cautious, case-by-case approach, prioritising enforcement against misleading promotions over proactive classification.

Generally, payments can be made legally with cryptocurrencies in New Zealand. The FEC Report observes that lack of ability for businesses to use cryptocurrency in New Zealand would reduce the viability and competitiveness of such businesses.

A leading New Zealand legal commentary suggests that it has become more common for employees, especially in crypto-related industries, to be paid in crypto-assets. The IRD has issued rulings on taxing such payments as salary or bonuses, treating them as part of an employee’s income and subject to PAYE tax. However, under employment law, specifically the Wages Protection Act 1983, wages must be paid in “money,” which does not currently include crypto-assets. See also 6.1 Tax Regime.

It is anticipated that there has been growing interest in using stablecoins like USDC and NZDS for both cross-border and local payments; however, adoption likely remains experimental, in part given the lack of regulatory clarity regarding stablecoins. As noted in 1.1 Evolution of the Blockchain Market,the RBNZ continues to monitor developments in stablecoin use as part of its broader work on Digital Cash.

Separately, the Department of Internal Affairs (DIA) reiterated in 2024 that businesses accepting crypto payments must comply with anti-money laundering (AML) obligations, particularly if they are deemed VASPs.

As far as the authors are aware, there are no specific legal/regulatory issues precluding the use of digital assets in collateral arrangements in New Zealand. Given the Cryptopia decision, it is clear that crypto-assets can be property. That being so, property-related statutes such as the Personal Property Securities Act 1999 and its related security interest registration regulation may apply to collateral arrangements concerning crypto-assets.

In the last 12 months there have been no legislative or regulatory changes in New Zealand specifically addressing the use of digital assets in collateral arrangements. The position established by the Cryptopiadecision – that crypto-assets constitute property – remains unchallenged. However, neither the FMA nor MBIE has issued specific guidance on the application of the PPSA to digital assets, and the practical issues of perfection, control and enforcement in decentralised or self-custodied environments remain unresolved.

Despite this, commercial interest in crypto-backed lending has grown, with some local and cross-border fintech platforms piloting stablecoin- or crypto-collateralised loan products. In the absence of formal regulation or case law, legal practitioners increasingly rely on private legal opinions to manage risk and structure these arrangements, highlighting the need for clearer legal frameworks as market activity expands.

The UK Jurisdiction Taskforce’s (UKJT) Legal Statement on Cryptoassets and Smart Contracts (the “Legal Statement”) was released in November 2019 and aimed to provide legal clarity on the status of crypto-assets and smart contracts under English private law.

The Legal Statement notes that:

• in principle, a smart contract can be identified, interpreted and enforced using ordinary and well-established legal principles;
• English law is already capable of managing anonymous or pseudonymous parties;
• English law is fully equipped to deal with bilateral smart contracts and also those structured around decentralised autonomous organisations (DAOs);
• requirements that a contract be signed can be met using a private key to authenticate the document; and
• requirements that a document be in writing can be met where a smart contract’s code element is recorded in source code (in many but not all cases).

The UKJT Legal Statement has been effectively endorsed by the courts in New Zealand. In Cryptopia,the court relied heavily on the Legal Statement in its analysis. In terms of guidance on issues and the application of legal principles to smart contracts in New Zealand, the Legal Statement is a good first port of call.

The MBIE Briefing Paper highlights the growing and developing use of blockchain as a key trend for New Zealand businesses. MBIE also observes that New Zealand companies are already adopting smart contract technologies, such as musical festival Rhythm and Vines, and Voxels.

MBIE has continued to monitor the adoption of blockchain technologies, including smart contracts, across various sectors such as supply chains, finance and the creative industries. While acknowledging the growing use of these technologies, MBIE has not introduced specific regulatory frameworks for smart contracts but emphasises the need for quality governance as the technology evolves.

Smart contracts are also discussed in the FEC Advisers Report, which noted the following in summary.

• While many smart contracts involve crypto-asset transfers, they can also be used in supply chains to securely record and share information among participants, similar to current ERP systems; however, once recorded, the information is tamper proof and it can be made visible to other supply chain participants.
• However, the learned authors note that the term “smart contracts” is somewhat of a misnomer.
• While some smart contracts can serve as legal agreements, many do not. For instance, blockchain voting systems use smart contracts to record votes but are not legal contracts.
• For those that are intended to form a legal contract (for now at least), such contracts tend to be straightforward.

Given the increased use of smart contracts and ongoing development of blockchain, the law is having to adapt and evolve at pace. While New Zealand case law dealing with smart contracts is negligible, the New Zealand courts may take guidance from Australian decisions, including the following.

• Re Nasdaq Technology AB [2021] APO 39 – Nasdaq filed a patent application involving smart contract technology, and the Deputy Commissioner of Patents found that the claimed invention was “not for a manner of manufacture”.
• ASIC v Web3 Ventures Pty Ltd [2024] FCA 64 (Block Earner) – Australia’s regulator, Australian Securities & Investments Commission (ASIC), sought declarations in relation to contraventions of the Corporations Act 2001 (the “Corporations Act”), that two of Block Earner’s products were “financial products”. The ASIC contended that the “Earner” and “Access” products are financial products because each product was a MIS or a derivative. If Earner or Access were financial products, then it was common ground that Block Earner had contravened the Corporations Act by carrying on a financial services business without holding an Australian Financial Services Licence (AFSL). Further, if either was a MIS, then Block Earner had contravened the Corporations Act by operating an unregistered MIS. It was held that the Earner product was a MIS, but not a derivative; however, the Access product was neither and therefore not a financial product.
• ASIC v BPS Financial Pty Ltd[2024] FCA 457 (Qoin) – The ASIC alleged that BPS carried on financial services business without holding an AFSL and that it made false and misleading representations in connection with the supply or use of a financial product. The court found that the Qoin Wallet was a “financial product” for the purposes of the Corporations Act (specifically, a “non-cash payment facility”). However, the court rejected ASIC’s attempt to classify the entire Qoin blockchain that processed transactions as a “financial product” under Australian law. In this sense, the case could be seen as a precedent for how smart contract-enabled products should be legally assessed within Australia’s regulatory framework.

Some of the services provided in these cases could be classified as a “financial service” under the FSP Act. The FSP Act defines financial services broadly to include services involving the transfer of money or value, such as payment services. These services would require registration and compliance with relevant regulations to ensure consumer protection and adherence to anti-money laundering requirements (see 4.1.4 Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Requirements). Similarly, false statements about financial services would be covered by the fair dealing provisions of the FMCA and/or the Fair Trading Act 1986 (FTA) (see 4.1.3 Marketing).

Legal practitioners in New Zealand maintain that smart contracts are enforceable under existing contract law principles, provided they meet the traditional elements of a contract:

• offer;
• acceptance;
• consideration;
• intention to create legal relations; and
• certainty of terms.

This perspective aligns with international views and underscores the adaptability of current legal frameworks to emerging technologies.

In summary, while there have been no significant legal or regulatory changes concerning the enforceability of smart contracts in New Zealand in the previous 12 months, the combination of regulatory initiatives like the FMA’s sandbox and ongoing governmental monitoring indicates a supportive environment for the continued integration of smart contracts into various sectors.

In New Zealand, there are a number of regulatory consequences for regulated firms and/or investment funds with exposure to crypto-assets.

Managed funds, including KiwiSaver funds, dealing with crypto-assets must comply with various regulatory requirements to ensure investor protection, financial stability and market integrity. They are regulated primarily by the FMCA, which sets out comprehensive requirements for the registration, disclosure, governance and ongoing compliance of managed investment schemes (MIS). These include the necessity for a licensed manager and a licensed independent supervisor to oversee the fund, as well an independent custodian to hold and safeguard scheme assets. These ensure proper conduct and protection of investors’ interests. Managers must provide clear and timely disclosure to investors, including a product disclosure statement (PDS) and annual fund updates. Additionally, managed funds must adhere to strict conduct and reporting standards, ensuring transparency and accountability in their operations.

New Zealand examples of funds with exposure to crypto-assets include:

• Koura Wealth;
• Crossgate Capital; and
• Vault.

Financial Markets Conduct (Market Index) Exemption Notice 2024

Recognising the challenges in applying traditional market indices to funds with cryptocurrency assets, the FMA issued this exemption notice in July 2024. It allows fund managers to use appropriate cryptocurrency or commodity indices or benchmarks, provided they are independently administered or widely recognised, to assess fund performance. This move aims to promote innovation and flexibility in financial markets while ensuring investors receive relevant information.

DIMS Monitoring

In October 2024, the FMA also released monitoring insights into the discretionary investment management services (DIMS) sector, highlighting the need for improvements in governance and risk management, which are especially relevant for digital asset-related offerings. Crypto copy trading platforms typically allow users to mirror the trades of experienced investors rather than giving full discretionary control to a provider. This distinction may mean that such platforms do not meet the strict definition of DIMS. The FMA has not explicitly classified crypto copy trading platforms as DIMS, but they may still be subject to other financial regulations, especially if they involve managed investment schemes, financial advice or derivative trading. If a platform exercises significant control over investment decisions, it could require a DIMS market services licence.

As detailed in 1.1 Evolution of the Blockchain Market, the FMA announced recently that it was launching a pilot “regulatory sandbox” for 2025. The sandbox approach was endorsed in the FEC Report; however, it is not discussed in the Government Response. This sandbox now exists.

The initiative provides a controlled environment where fintech companies, including those developing blockchain applications, can test innovative products and services under regulatory supervision. The sandbox aims to lower barriers to entry for innovators while ensuring consumer protection and market integrity.

Such an initiative also aims to create an environment that fosters collaboration between the government and the crypto industry, promoting responsible business practices and consumer protection.

Guidance relating to VASPs and FATF is discussed at 4.1.4 Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Requirements regarding AML/CFT regulation. See also discussion regarding international approaches at Appendix Two of the FEC Advisers Report.

The following regulatory bodies are the ones most relevant to businesses or individuals using blockchain in New Zealand.

• The FMA is the primary regulator for entities offering financial products, financial advice products and financial services in relation to crypto-assets. As discussed in 1.1 Evolution of the Blockchain Market and 4.3 Regulatory Sandbox, the FMA has launched a regulatory sandbox pilot to support innovation in fintech and blockchain under supervision.
• The DIA supervises New Zealand’s AML/CFT scheme. It has released updated AML/CFT guidance for VASPs and published a National Risk Assessment highlighting crypto-related risks.
• The Commerce Commission oversees the FTA and other consumer protection statutes. It recently shifted oversight of the CCCFA to the FMA and emphasised consumer protection in digital markets.
• The RBNZ oversees crypto-asset activities of banks. It expanded its Exchange Settlement Account System (ESAS) access to include non-banks, potentially benefiting blockchain-based payment providers.
• The IRD oversees the taxation of crypto-assets. It maintained its position treating crypto-assets as property and signalled stronger tax enforcement efforts.
• The SFO oversees serious financial crime. It continues to monitor digital assets for their role in financial crime, with ongoing enforcement priorities.

The approaches of these regulators are discussed in the FEC Advisers Report.

See discussion at 4.1.2 Licensing and 4.1.4 Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Requirements regarding FSP DRSs and 4.1.3 Marketing regarding the ASA.

BlockchainNZ continues to serve as New Zealand’s primary self-regulatory organisation for the blockchain and digital asset sector. Operating under the NZTech umbrella, BlockchainNZ plays a pivotal role in policy advocacy, industry co-ordination and community engagement.

In October 2024, BlockchainNZ hosted the annual BlockchainNZ & Web3NZ Awards, celebrating notable contributions within Aotearoa’s blockchain and Web3 industries. Additionally, the organisation actively engaged in regulatory discussions through its Laws and Regulations Working Group, contributing to policy dialogues and consultations.

As already noted, New Zealand’s Parliament launched the Parliamentary Inquiry, leading to the FEC Report and Government Response. The MBIE, the CoFR and the MOJ are also taking action and providing guidance.

While there have been some important New Zealand judicial decisions that have played a role in interpreting and establishing law applicable to the use of blockchain in New Zealand, there is still little guidance from the New Zealand courts in relation to action by regulators against market participants. In this regard, New Zealand courts are likely to look to decisions in other Commonwealth jurisdictions for guidance. Some key New Zealand cases include the following.

Property/Trusts

Cryptopia

See 2.1 Ownership.

Relationship Property

Beck v Wilkerson [2019] NZFC 9883

• A relationship property case concerning the cryptocurrency Litecoin. The court was unable to determine which party had control of the Litecoin and both parties denied they could access their joint crypto wallets.
• The court held that the Litecoin was “obviously relationship property” and that, should either party be found to have profited from the Litecoin, that profit should be split equally. However, it declined to find that one party had deliberately diminished the value of the Litecoin by losing hardware or failing to report its loss to the police. The court was not satisfied on the facts that the disappearance of the relevant hardware was a deliberate action to diminish the value of the pool of assets.

Curtis v McBride [2020] NZFC 7791

• Relevant to crypto-assets in this relationship property dispute was the application for the appointment of an inquiror pursuant to the Property (Relationships) Act 1976 to give an opinion as to the value of digital assets, including cryptocurrency investments.
• The court also did not question that the cryptocurrency was a relationship property asset, and stated that an inquiror would have been appointed had Mr McBride not offered instead to provide more discovery regarding the requested information.

Criminal Proceeds

Commissioner of Police v Vinnik – BC202360320

• Vinnik, a Russian national, operated the cryptocurrency exchange BTC-e, which was alleged to have laundered billions of dollars for cybercriminals and other illicit activities.
• New Zealand Police restrained NZD140 million in assets linked to Vinnik and BTC-e, making it the largest restraint of funds in New Zealand’s history.
• It is alleged that BTC-e operated without adequate AML controls, facilitating the laundering of proceeds from various criminal activities, including hacking, ransomware attacks, fraud and drug trafficking.
• The seizure was part of a global investigation involving co-operation between New Zealand Police and the US Internal Revenue Service.
• The funds are subject to forfeiture proceedings under New Zealand’s Criminal Proceeds (Recovery) Act 2009. The Commissioner’s case is that the offences of money laundering and receiving have been committed in New Zealand, justifying the eWallet funds being restrained.
• This case demonstrates New Zealand’s ability to collaborate internationally to enforce AML regulations and prosecute cybercrime. It underscores the global nature of cybercrime and the importance of robust legal frameworks to manage and recover illicit assets.

Civil Procedure

MB Technology Limited v Ecomi Technology PTE Limited

• MB Technology brought proceedings against Ecomi in Singapore. It sought freezing orders over Ecomi and other respondents’ assets in New Zealand.
• MB Technology offered by way of security for costs 6.5 million GoChain, held in a PIN-protected offline wallet which it had deposited with its solicitors in New Zealand. Wylie J found that having no assets in New Zealand, MB Technology’s undertakings as to damages offered no real protection to the respondents.
• The Court of Appeal overturned Wylie J’s decision, allowing the crypto-assets to serve as security. Factors considered included a required security much higher than the claim due to the volatility of crypto-assets, urgency of the need for freezing orders, and the short duration of the freezing orders.

Insolvency

Ruscoe v Houchens [2024] NZHC 419

• Cryptopia’s liquidators sought directions on the distribution of assets, having come up with a proposal.
• As there was no power of sale in Cryptopia’s terms, the liquidators could not exchange the cryptocurrency to a fiat currency for distribution. So, distribution was directed to be implemented by verified account holders (who have completed an identity verification exercise) submitting a wallet address (also to be “screened to identify any risks such as money laundering or terrorist financing”).
• Distribution to account holders in countries where transfer of cryptocurrency may constitute an offence will instead take place via a fiat currency, with the cryptocurrencies being converted by the liquidators prior to distribution.

Epic Trust litigation

In January 2024, the High Court dismissed an application by Epic Trust Ltd, associated with the Principality of Cogito metaverse, to join the Cryptopia liquidation proceedings. The court questioned the validity of assignment agreements under an unrecognised jurisdiction and emphasised that Cryptopia’s terms prohibit such transfers. Additionally, interim injunctions were issued against Epic Trust and related parties for unauthorised use of confidential information.

Relevant Judicial Decisions in Other Jurisdictions

These New Zealand cases are consistent with similar developments in the Singapore courts, which have found that crypto-assets fulfilled the four requirements to be classified as property, and – in the context of determining whether crypto-assets could be the subject of an injunction and specifically whether the court had jurisdiction to grant injunctive relief against persons unknown and ancillary disclosure orders against foreign exchanges to assist in the tracing of stolen crypto-assets and identification of the thieves (CLM v CLN [2022] SGHC 46 (Cryptopia followed)) – could be property capable of being held on trust, and could be classified as a chose in action, giving rise to the remedy of constructive trust (ByBit Fintech Ltd v Ho Kai Xin & Ors [2023] SGHC 199, which concerned allegations of employee theft of stablecoin Tether USDT).

The Australian cases referred to in 3.1 Enforceability may also influence New Zealand judgments moving forward. Another notable recent Australian case testing the regulatory boundaries relevant to crypto-assets is ASIC v Finder Wallet Pty Ltd [2024] FCA 228, where the court found that Finder did not provide unlicensed financial services in relation to crypto-asset-related product Finder Earn.

Unlike the ASIC in Australia, where there is a developing body of case law of enforcement action relating to digital assets, New Zealand decisions are scarce.

The FEC Advisers Report notes that there are four known cases of cryptocurrency-based pyramid or multi-level marketing schemes: OneCoin, Bitcoin Aotearoa, Lion’s Share, and Mobilio/Justbeenpaid.

Enforcement action available to the FMA where it asserts a breach of the FMCA include the stop orders prohibiting an entity from certain conduct, and direction orders compelling an entity to take certain actions, mostly in relation to publishing of information. The FMA’s ability to use these enforcement actions in relation to crypto-assets turns on whether the assets are financial products or whether a financial service or financial advice product is being provided.

The only legal review conducted of a direction order or stop order involving digital assets was in Validus FZCO v Financial Markets Authority [2023] NZHC 1701. However, crypto-assets were only incidental to the issues with the stop order, so the case does not discuss the relationship between digital assets and financial products.

Serious Fraud Office (SFO) Investigation Into Digital Asset Exchange Ltd (Dasset)

In February 2024, the SFO initiated an investigation into Dasset, a New Zealand-based cryptocurrency trading platform that entered liquidation in August 2023. This action followed a referral from the Financial Markets Authority (FMA) and underscores the SFO’s commitment to addressing potential misconduct in the crypto sector (Serious Fraud Office, New Zealand).

FMA’s Enhanced Regulatory Focus

The FMA has intensified its efforts to ensure fairness and compliance within financial markets. In its 2024 Annual Report, the FMA highlighted several enforcement actions against major financial institutions for failing to provide promised benefits to customers, resulting in over NZD215 million returned to affected clients. Additionally, the FMA has been proactive in issuing public warnings and educational campaigns to combat financial scams and unregulated investment activities, including those related to cryptocurrencies.

New Zealand’s approach to crypto-assets taxation has to date, according to the FEC Advisers Report, been “ad hoc and belated” with “sporadic amendments to the Tax Acts as they come”. Rather than keeping with this traditional approach, the FEC Report has recommended that IRD explore, in consultation with the crypto-assets industry, whether tax incentives for crypto-assets service providers are necessary or appropriate, in addition to continuing work to provide clarity around the treatment of crypto-assets within the tax system, in order to encourage investment of capital in New Zealand and enhance the competitiveness of the New Zealand tax system.

The most significant legislative change to date has been with the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022, which affirmed that crypto-assets are not subject to GST and are generally “excepted financial arrangements”, meaning they are generally (though not as a rule) not subject to tax on unrealised gains. New Zealand, like many countries, faces challenges in the classification of different crypto-assets within its existing tax system.

The IRD has issued helpful guidance on taxation of crypto-assets. It notes, among other things, that crypto-assets are treated as a form of property for tax purposes. The IRD guidance includes a number of “Tax Technical” issues papers and rulings covering a range of topics such as the following.

• Tax treatment of crypto-assets received from blockchain forks.
• Income tax – salary and wages paid in crypto-assets.
• Taxing crypto-assets income.
• Income tax – bonuses paid in crypto-assets.
• Working out your crypto-asset income and expenses.
• Crypto-assets and GST (goods and services tax).
• Staking services.

Implementation of OECD’s Crypto-Asset Reporting Framework (CARF)

As discussed in 4.1.1 Regulatory Overview and 4.1.4 Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Requirements, in August 2024, New Zealand announced plans to adopt the OECD’s CARF by April 2026. This framework mandates crypto-asset service providers to collect and report user transaction data to the Inland Revenue, enhancing transparency and aligning with international tax standards.

Inland Revenue’s Enforcement Actions

In July 2024, the Inland Revenue intensified efforts to ensure tax compliance among crypto-asset users. The department identified 227,000 unique users conducting approximately 7 million transactions totaling NZD7.8 billion. Letters were sent to individuals suspected of under-reporting income, emphasising the importance of declaring earnings from crypto activities.

Currently in New Zealand there are no “crypto-specific” ESG/sustainable finance requirements applicable to crypto-assets. However, one of the terms of reference for the Parliamentary Inquiry was “to understand the environmental impact of ‘mining’ cryptocurrencies” and this issue is addressed in detail in the FEC Advisers Report.

Currently there are no bespoke privacy laws relating to crypto-assets or blockchain-based products or services in New Zealand. Privacy generally is governed by the Privacy Act 2020 (the “Privacy Act”).

With the exception of the “Clean Slate Scheme” relating to some criminal offending, the “right to be forgotten” does not exist in New Zealand.

Furthermore, under the Privacy Act, people in New Zealand have the right to access personal information held by New Zealand or overseas agencies (including unincorporated bodies) carrying on business in New Zealand and the right to correct any inaccurate information. The inherent immutability of blockchain, which ensures that once data is recorded it cannot be altered or deleted, conflicts with the right to correction (or right to be forgotten) under privacy laws. This also presents for New Zealand-based participants of DAOs, which could be considered unincorporated bodies.

The Privacy Act includes provisions for the protection of personal data transferred outside New Zealand, requiring comparable privacy protections in the destination country. As they can be decentralised and distributed across multiple jurisdictions, blockchain networks can complicate compliance with laws regulating international data transfers.

Developments in 2025 include the following.

• Privacy Amendment Bill introduction – In early 2025, the New Zealand government introduced the Privacy Amendment Bill, aiming to enhance transparency in personal data collection. The bill mandates organisations to disclose when personal information is collected indirectly, such as through third-party sources. This amendment seeks to bolster individuals’ awareness of data collection practices, including those pertinent to blockchain applications.
• Proposed Biometrics Privacy Code – The Office of the Privacy Commissioner released a draft Biometric Processing Privacy Code in early 2025. This code establishes specific rules for the collection, use, storage and processing of biometric information, including data types like facial recognition and fingerprint scanning. While not exclusively targeting blockchain technologies, the code’s emphasis on machine-based data processing has implications for blockchain applications that handle biometric data.
• Customer and Product Data Act 2025 – In March 2025, the Customer and Product Data Act received Royal Assent, introducing a legislated consumer data right (CDR) on a sectoral basis, starting with the banking sector. This act requires designated data-holding businesses to share certain personal data with accredited third parties upon consumer consent. While initially focused on banking, the principles established may influence data-handling practices in blockchain services, especially those intersecting with financial data.

Despite these advancements, New Zealand has not enacted blockchain-specific privacy legislation. The inherent immutability of blockchain technology continues to pose challenges in reconciling with rights under the Privacy Act, such as the right to correction. As blockchain applications evolve, further legal clarifications may be necessary to address these conflicts.