NZ’s Financial Market’s Authority recently released guidance on the regulation of ICOs under NZ securities laws – in particular under the Financial Markets Conduct Act 2013 (FMCA). This follows a spate of similar guidance releases by securities regulators around the world.
The FMA’s guidance is pretty conservative. They advise that:
Compliance with the product disclosure statement regime and other regulatory requirements is unlikely to be attractive to NZ entrepreneurs interested in raising funds via an ICO. The costs of compliance are significant, whereas the NZ retail market for this type of investment is diminishingly small in comparison to international markets.
NZ entrepreneurs will be able to offer tokens in an ICO to wholesale investors, using the same criteria that apply to any tech company private capital raising. However, this may not be worthwhile, again due to the small size of NZ’s wholesale capital pool for high risk investments.
How will this affect the participation of NZ investors in offshore ICOs? Our guess is that the blanket designation of tokens and cryptocurrencies as securities will see NZ investors excluded from ICO’s run by reputable players in ICO markets, who will generally wish to avoid regulatory complexity in minor markets.
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