Crypto Regulations in New Zealand 2024

New Zealand is a technology-neutral country! The New Zealand Financial Markets Authority (FMA) is responsible for regulating all financial ongoings in the country, including the digital assets. The country has always maintained a normal stance towards cryptocurrency, it has worked on several steps to regulate all the aspects of the financial services. 

Crypto is considered a form of property in New Zealand and it is subject to income tax! However, no specific regulation is dedicated to the cryptocurrencies. In this module by Coinpedia, we will study the regulations on cryptocurrency in New Zealand in 2024.

Introduction

There is no specific legislation in place to look after the cryptocurrencies. However, the tax and contract laws apply to them. It was declared by the Inland Revenue Department (IRD) in 2018 that cryptocurrency shall be treated as property. The crypto assets were to be taxed on the basis of income tax rates. The Financial Markets Conduct Act 2013 (FMCA) is the primary legislation applicable to financial products, like cryptocurrency. 

Buying crypto is absolutely legal in New Zealand! It is to be noted that cryptocurrency is not a legal tender in the country yet. The FMA regulates the crypto organizations to ensure consumer protection.

Is Crypto Legal in New Zealand?

Buying Crypto is legal in New Zealand, in fact, crypto is largely accepted in the financial sector owing to its technology-neutral legislation. It shall be noted that cryptocurrency is not a legal tender in New Zealand. The FMA regulates Cryptocurrency brokers and exchanges, crypto wallet providers, blockchain-based businesses with ICOs, and blockchain projects offering investment options. 

These organizations need to obtain licenses from the FMA which allows them to operate under the laws, like Anti-Money Laundering and Countering Financing of Terrorism Act 2013, the Financial Markets Conduct Act 2013 , the Financial Advisors Act (for ICOs) and the Financial Service Providers Act 2008. The Department of Internal Affairs is responsible for AML regulations. 

Crypto Acts in New Zealand

• The Financial Markets Conduct Act of 2013

FMCA looks after financial products like cryptocurrencies which fall under the categories like:

Debt security, Equity security, Derivative or managed investment product.

• Anti-money Laundering and Countering Financing of Terrorism Act 2009

The AML and CFT Act 2009 makes clarity about the requirements for compliance with AML/CFT obligations. The DIA has supervisory authority to look after New Zealand’s virtual asset service providers, including Crypto exchanges.

• Income tax Act 2007 and Goods and Services Tax Act 1985

These acts are administered by the Inland Revenue Department. They were revised recently to explain how crypto assets will be taxed.

• Fair Trading Act 1986 and Consumer Guarantees Act 1993

They protect consumers in general and are governed by the Commerce Commission. They apply to crypto assets if they are considered as financial products.

Taxation Policy

New Zealand does not have a capital gains tax. All of the crypto income is grouped together and taxed at the same rate. The activities which are taxed in New Zealand are: 

• Selling, trading, mining, and staking cryptocurrency
• Selling NFTs
• Earning crypto interests
• Giving crypto gifts

The crypto is subject to normal tax rates between 10.5-39% depending on the annual income.

Source: Coinledger.io

New Zealand is remembered for its progressive tax system, which means that one would not pay a flat tax on his entire income. Instead, one will pay progressively higher taxes on different segments of the income.

The NZ tax system is different from other countries! All the crypto income is grouped together. The final sum is counted at one rate, regardless of profits received from trading or selling crypto assets.

Purchasing crypto assets is not taxable in New Zealand, as the government considers the income only. The IRD monitors all tax declarations closely. Violations can lead to a 150% fine of up to $50,000. 

Conclusion

Crypto culture is becoming widespread in New Zealand. The country’s government keeps a regular check on regulating the cryptocurrencies. It has a progressive system where the final tax amount depends on the income. New Zealand is considered a crypto friendly nation as it keeps adapting itself according to the crypto evolution.