New Zealand

Retail_Trading_Status

Allowed-Regulated High Confidence

Analysis ID: #744
Version: Latest
Created: 2025-12-12 04:56
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Executive Summary

Retail cryptocurrency trading is legal and regulated in New Zealand, primarily through Anti-Money Laundering (AML) laws and financial service registration requirements. While there is no bespoke 'Crypto Act' for market conduct, Virtual Asset Service Providers (VASPs) must register on the Financial Service Providers Register (FSPR) and comply with strict AML/CFT obligations supervised by the Department of Internal Affairs (DIA). Cryptocurrency is legally classified as 'property' rather than currency, and the Financial Markets Authority (FMA) requires a full license for platforms offering crypto derivatives.

Key Pillars

Financial Service Providers Register (FSPR) Registration (Mandatory for exchanges)
Department of Internal Affairs (DIA) Supervision (AML/CFT for spot trading)
Financial Markets Authority (FMA) Licensing (For derivatives and ICOs)
Travel Rule Implementation (Effective June 2024)
Dispute Resolution Scheme (DRS) Membership

Landmark Laws

Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009 (Public Act 2009 No 6) - Enacted: 2009-10-16
- Primary legislation governing financial crime. Amended to explicitly include 'virtual asset service providers' (VASPs) as reporting entities, requiring them to conduct KYC, report suspicious transactions, and comply with the Travel Rule.
- Source

Financial Service Providers (Registration and Dispute Resolution) Act 2008 (Public Act 2008 No 97) - Enacted: 2008-09-29
- Requires entities providing 'value transfer services' or 'keeping, investing, administering money' (including crypto exchanges) to register on the FSPR and join a dispute resolution scheme.
- Source

Financial Markets Conduct Act 2013 (Public Act 2013 No 69) - Enacted: 2013-09-13
- Governs financial products. While most cryptocurrencies are not 'financial products', this act regulates ICOs, tokens deemed securities, and crypto derivatives.
- Source

Ruscoe v Cryptopia Ltd (in liq) ([2020] NZHC 728) - Enacted: 2020-04-08
- Landmark High Court judgment confirming that cryptocurrencies are 'property' under New Zealand law and can be held in trust.
- Source

Considerations

Tax Treatment: Crypto is treated as property. Gains are generally taxed as income (Revenue Account Property) rather than capital gains, meaning frequent traders pay standard income tax rates.
Derivatives vs. Spot: Spot trading requires Registration (FSPR) + AML compliance; Derivatives trading requires a full Derivatives Issuer License from the FMA.
Travel Rule: New Zealand implemented the FATF Travel Rule for crypto in June 2024, requiring exchanges to share sender/receiver data for transactions.
Banking Access: While not banned, some NZ banks have historically been hesitant to service crypto clients, though this is improving with the formalized regulatory regime.

Notes

New Zealand's regulatory approach is characterized by high clarity despite the lack of a 'Crypto Act'. The use of the FSPR as a central registry provides consumers with a way to verify legitimate local exchanges. The 'Allowed-Regulated' status is justified by the mandatory nature of this registration and the active supervision by the DIA for AML/CFT purposes.

Remaining Uncertainties

Whether the RBNZ will eventually impose prudential regulation on stablecoin issuers as hinted in their 'Future of Money' reports.
The exact timeline for the implementation of the OECD's Crypto-Asset Reporting Framework (CARF) for tax transparency, expected around 2026.

Detailed Explanation

Retail cryptocurrency trading is legal and regulated in New Zealand, with a status of Allowed-Regulated. The regulatory framework is characterized by high clarity, despite the absence of a bespoke 'Crypto Act'. Instead, the ecosystem is governed by the application of existing financial services and anti-money laundering laws. The foundational requirement for any Virtual Asset Service Provider (VASP), such as a spot cryptocurrency exchange, is mandatory registration on the Financial Service Providers Register (FSPR) under the Financial Service Providers (Registration and Dispute Resolution) Act 2008. These registered entities must also join a government-approved Dispute Resolution Scheme (DRS) for consumer protection. For anti-money laundering and counter-financing of terrorism (AML/CFT) compliance, VASPs are supervised by the Department of Internal Affairs (DIA) under the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009, which was amended to explicitly include them as reporting entities. This requires them to conduct customer due diligence (KYC), monitor transactions, report suspicious activity, and, as of June 2024, comply with the FATF Travel Rule for sharing sender and receiver information. The legal classification of cryptocurrencies as 'property' was definitively established by the High Court in the landmark case Ruscoe v Cryptopia Ltd (in liq) [2020] NZHC 728. For activities beyond simple spot trading, such as offering crypto derivatives or conducting Initial Coin Offerings (ICOs) that constitute securities, a full license from the Financial Markets Authority (FMA) under the Financial Markets Conduct Act 2013 is required. Tax treatment aligns with the property classification, with gains generally treated as taxable income for frequent traders. While banking access for crypto businesses is not banned, some banks have historically been hesitant, though this is improving with the formalized regulatory regime.

Summary Points

I. Regulatory Status
* Retail cryptocurrency trading is legal and regulated in New Zealand.
* Status is classified as Allowed-Regulated.
* There is no bespoke 'Crypto Act'; regulation is achieved through existing financial and AML laws.

II. Key Regulatory Bodies
* Department of Internal Affairs (DIA): Primary supervisor for Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) compliance for spot trading Virtual Asset Service Providers (VASPs).
* Financial Markets Authority (FMA): Licenses and regulates entities offering crypto derivatives and oversees Initial Coin Offerings (ICOs) deemed securities.
* Financial Service Providers Register (FSPR): Maintains the mandatory central registry for all financial service providers, including crypto exchanges.

III. Important Legislation
* Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009: Primary AML/CFT law, amended to explicitly include VASPs. Requires KYC, suspicious transaction reporting, and compliance with the Travel Rule.
* Financial Service Providers (Registration and Dispute Resolution) Act 2008: Mandates FSPR registration and Dispute Resolution Scheme (DRS) membership for entities providing 'value transfer services'.
* Financial Markets Conduct Act 2013: Governs financial products; applies to crypto derivatives and ICOs/securities tokens.
* Ruscoe v Cryptopia Ltd (in liq) ([2020] NZHC 728): Landmark High Court judgment confirming cryptocurrencies are legally classified as 'property' and can be held in trust.

IV. Compliance Requirements
* For all VASPs (Spot Trading):
* Mandatory registration on the Financial Service Providers Register (FSPR).
* Mandatory membership in a government-approved Dispute Resolution Scheme (DRS).
* Full compliance with AML/CFT obligations under the DIA, including KYC and the Travel Rule (effective June 2024).
* For Derivatives/IROs:
* A full Derivatives Issuer License from the Financial Markets Authority (FMA) is required.
* Tax Treatment: Cryptocurrency is treated as property for tax purposes. Gains are generally taxed as income (Revenue Account Property) for frequent traders.

V. Notable Restrictions or Limitations
* Banking Access: While not banned, some New Zealand banks have historically been hesitant to service crypto businesses, though this is reportedly improving.
* Regulatory Distinction: A clear regulatory divide exists between spot trading (FSPR + AML) and derivatives trading (FMA license).

VI. Recent Developments or Notes
* Implementation of the FATF Travel Rule for cryptocurrency transactions became effective in June 2024, requiring exchanges to share sender and receiver information.
* The regulatory approach provides high clarity through the mandatory FSPR registry, allowing consumers to verify legitimate local exchanges.

Full Analysis Report

New Zealand employs a 'technology-neutral' regulatory framework where cryptocurrency activities are governed by existing financial laws rather than a single bespoke crypto statute. The regulatory status is best described as 'Allowed-Regulated' because, while spot trading does not require a discretionary market conduct license, it mandates registration on the Financial Service Providers Register (FSPR) and strict adherence to the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act. This regime effectively acts as a licensing barrier, as the Department of Internal Affairs (DIA) and the Financial Markets Authority (FMA) can de-register entities that fail to comply.

The primary distinction in New Zealand's framework is between 'financial products' and 'digital assets'. The FMA has clarified that typical cryptocurrencies (like Bitcoin) are not 'financial products' under the Financial Markets Conduct Act 2013 (FMCA). Therefore, spot exchanges do not need a license from the FMA but must register as Financial Service Providers (FSPs) and comply with AML rules supervised by the DIA. However, if an asset is deemed a financial product (e.g., a token offering voting rights or dividends, or a derivative contract), the issuer or exchange must obtain a full license from the FMA.

In terms of enforcement and compliance, New Zealand has been proactive. The AML/CFT regulations were updated to explicitly cover Virtual Asset Service Providers (VASPs), and the 'Travel Rule' (requiring the exchange of customer information between VASPs) came into force on June 1, 2024. This aligns New Zealand with FATF standards. The High Court case Ruscoe v Cryptopia Ltd provided critical legal certainty by defining cryptocurrency as 'property', which has significant implications for liquidation, trusts, and taxation.

Taxation remains a key consideration for retail investors. The Inland Revenue Department (IRD) treats crypto assets as property. New Zealand does not have a comprehensive capital gains tax; instead, it applies income tax to property acquired with the 'purpose of disposal'. Given the volatility of crypto, the IRD often presumes it is acquired for disposal, making trading profits fully taxable as income. The Reserve Bank of New Zealand (RBNZ) maintains a monitoring role but has stated it does not see a need for a separate regulatory framework for stablecoins at this time, focusing instead on 'increased vigilance'.

In terms of enforcement and compliance, New Zealand has been proactive. The AML/CFT regulations were updated to explicitly cover Virtual Asset Service Providers (VASPs), and the 'Travel Rule' (requiring the exchange of customer information between VASPs) came into force on June 1, 2024. This aligns New Zealand with FATF standards. The High Court case *Ruscoe v Cryptopia Ltd* provided critical legal certainty by defining cryptocurrency as 'property', which has significant implications for liquidation, trusts, and taxation.

Source Evidence

Primary and secondary sources cited in this analysis

Cryptocurrencies | Financial Markets Authority primary (regulator)

2024-05-06

"If you want to buy, sell or trade cryptocurrencies, use platforms or other service providers that are registered on New Zealand's Financial Service Providers Register (FSPR)."

Guideline: Identity verification code of practice 2013 (Amended for VASPs) primary (regulator)

2023-12-01

"Reporting entities, including virtual asset service providers, must verify the identity of their customers."

Cryptoassets - Inland Revenue primary (official_government)

2024-01-01

"Cryptoassets are treated as a form of property for tax purposes."

RBNZ: The Future of Money – Private Innovation primary (central_bank)

2023-06-30

"We agree with the balance of submitters that a regulatory approach isn't needed right now, but increased vigilance is."

New Zealand's Crypto Travel Rule: DIA Requirements secondary (analysis)

2024-06-01

"The Parliamentary Counsel Office of New Zealand Legislation updated its Anti-Money Laundering... Regulations 2011 on 1 June 2024... extended its definition of wire transfers to include virtual assets."

Ruscoe v Cryptopia Ltd Judgment Analysis secondary (analysis)

2020-04-08

"The High Court has released its judgment in Ruscoe v Cryptopia... confirming that cryptocurrencies are 'property' within the definition of section 2 of the Companies Act 1993."