ALL TOKENS OR CRYPTOCURRENCIES ARE SECURITIES, SAYS NEW ZEALAND’S FINANCIAL REGULATOR
The financial regulator of New Zealand has released its official release on the use of digital currencies and Initial Coin Offerings (ICO).
An explanation was released by The new Zea (FMA) of New Zealand of the events of tokens, they have insisted that “the extent to which an ICO is regulated depends on whether a ‘financial product’ is being offered to retail investors in New Zealand.” The four categories of the products of finance determined by the Financial Markets Conduct Act in 2013 of the authority are debt securities, managed investment products, equity securities, and derivatives. The “specific characteristics and economic substance” as stated by FMA, of an Initial Coin Offering (ICO) would be the determinants of the type of the financial product it is.
Under the FMC Act, every digital currencies or tokens are securities, including the ones that are not financial products. A security could be termed to mean any facility or program that possesses or is meant to possess, the effect of someone doing an investment or coping with a financial risk.
In their statement, the FMA stated that: “We can also, if appropriate, grant exemptions to ensure FMC Act requirements are fit for purpose for ICOs. This may include modifying PDS (product disclosure statement) or government.”
Also, the authority has agreed that Initial Coin Offerings (ICOs) are not regarded or grouped as “crowdfunding” under the umbrella meaning of the word in New Zealand as the authority specifically license the systems of crowdfunding.
Digital currencies or tokens based in New Zealand and businesses like the exchanges, wallets, and individual brokers are needed to conform with laws and regulations stipulated by the authority of the Financial Market.
The proponents of the laws and regulations have advised traders to get a hold of the involved risks, including security and volatility in the investments of cryptocurrency.