New Zealand’s financial regulator has ruled that stablecoin denominated in the local currency, NZDD, is not a financial product, a move by a local law firm is an important step towards regulatory clarity.
The Financial Markets Authority (FMA) said on Wednesday that the new name for the stablecoin, which is pegged to the New Zealand dollar, came directly from a financial technology box test being carried out by the regulator.
“The economic nature of the NZDD stablecoin is that it is not a debt security, as the NZDD stablecoin is not an investment and no income, interest or other benefit is paid to the NZDD stablecoin holder,” the FMA said.
The law firm sees the appointment as a step in the right direction
New Zealand law firm MinterEllisonRuddWatts, which said it acted for NZDD issuer ECDD Holdings in relation to its participation in the FMA box, called the new designation an important step towards regulatory certainty for stablecoins in the country.
“However, it is important to note that the designation relates to a specific product and version of a stablecoin, which the NZDD does not constitute a general definition of the regulatory transaction of all stablecoins in the form described in the designation notice,” the company said.
“This benchmark represents the FMA’s pragmatic approach to financial innovation, which aligns with developments in comparable jurisdictions and provides a foundation from which to develop further pathways,” he added.
Sandbox pilot to extend the new license
The FMA has also announced that it plans to introduce limited or restricted licensing for FinTech companies as part of its pilot box.
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“Our financial system is changing faster than ever. This type of license will support companies to access the market with some restrictions that will be removed as the company grows,” said FMA chief executive Samantha Barras.
A 2024 report by consumer research firm Web3 Protocol Theory estimated that nearly 50% of New Zealand’s population of 5.2 million are either current crypto investors or considering investing.
Separately, data analytics firm DataCube Research projects New Zealand’s crypto market to be around $254 billion.
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