An overview of the cryptocurrency regulations in New Zealand
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Loading... - Fraser Gary
- 03 Feb 2023
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One of the key factors influencing crypto asset regulation in New Zealand is its status as a technology-neutral jurisdiction. This means that any service or technology that requires adherence to regulations can be governed by a law that is not specific to cryptocurrency.
The New Zealand Financial Markets Authority (FMA) is responsible for regulating all financial activities in the country, including cryptocurrencies. While the country maintains a relatively neutral stance toward digital currencies, it has implemented several measures to ensure that all aspects of these technologies and services are appropriately regulated.
For instance, New Zealand considers cryptocurrency a form of property and is thus subject to income tax. This means that if at any point, a cryptocurrency holder disposes of their holdings at a profit, they will be required to pay taxes on that profit. Disposals include selling or trading cryptocurrency, as well as using it to make a purchase.
Is cryptocurrency regulated in New Zealand?
Because most legislations in New Zealand are technology-neutral, no legislation is specifically dedicated to the regulation of cryptocurrencies in the country. However, tax and contract laws apply. The Inland Revenue Department (IRD) declared that cryptocurrencies were to be treated as property beginning in 2018.
According to the IRD, crypto assets were to be taxed based on defined income tax rates — similar to how cryptocurrency is taxed in other countries. This means that anyone who buys and sells cryptocurrencies will be taxed based on the difference between their purchase price and current market value at the time of sale or exchange.
The Financial Markets Conduct Act 2013 (FMCA) is the primary legislation applicable to financial products, including cryptocurrency. Generally, the FMCA dictates that financial product issuers have to comply with fair dealing obligations and governance, disclosure and operational obligations. Read More…
