The New Zealand Financial Markets Authority (FMA) has published a consultation on excluding qualifying New Zealand dollar (NZD) payment stablecoins from financial product status under the Financial Markets Conduct Act 2013. The proposed class designation would provide an interim pathway while broader reforms are developed, allowing eligible issuers to rely on common conditions without applying individually. Classification as debt securities can currently create barriers to exchange listings and banking access, despite these tokens functioning as payment instruments rather than investments.
Eligible stablecoins would have to be fully backed by NZD held on bare trust in bank deposits available on demand at a New Zealand registered bank. They could not pay holders income, interest or other gains generated by the issuer or a related party. Holders with an issuer account would have a right to redeem at face value, subject to commercially reasonable restrictions, including on timing and fees. The proposal would cover retail and wholesale holders but exclude stablecoins backed by invested reserves, commodities or algorithms.
Issuers would have to maintain reserves at least equal to the face value of tokens in circulation, publish reserve confirmations at least monthly, and obtain and publish independent reserve verification at least annually. Failure to meet ongoing requirements would restore financial product treatment during the period of noncompliance. Existing fair dealing, registration and applicable dispute resolution obligations would remain, alongside requirements to counter money laundering and terrorism financing. The consultation also seeks views on minimum assurance standards and whether additional capital buffers and disclosures to holders are needed.