Financial Markets Authority guidance on cryptocurrency services

We've been telling people for some time that it is not just as simple as offering up [choose a snazzy name for your cryptocurrency]coins and waiting for the cash to roll in to fund your pet blockchain project. Regulators in various jurisdictions are alive to the fact that ICOs (initial coin offerings) have been promoted as an end run around the strict regulation of financial market offers of shares, debt or other financial instruments and so are moving to both warn consumers and remind providers that traditional securities law will often apply. Here's an SEC warning from July this year, followed by ASIC in Australia. Many other regulators have recently issued similar warnings (Singapore, Hong Kong, Canada) and, for the moment, ICOs appear to be banned in China.

No surprise then that New Zealand's financial markets regulator, the FMA, has now issued comprehensive guidance on ICOs and cryptocurrency services generally.

tl:dr version: Many (most) cryptocurrency services and ICOs will be caught by the financial service provider regime under the Financial Advisers Act and/or the financial products requirements under the Financial Markets Conduct Act. Penalties for failure to comply with either of these regimes can be significant, and include potential criminal liability.

Image courtesy of Zach Copley

COMMENTS (0) Post a Comment

Authorisation Code:*
To prove you're human, please type the code in the grey box into the white box. The code is case-sensitive. If you can't read the code, click on the grey box to see a new code.