New Zealand’s financial regulator has determined that the local stablecoin NZDD does not qualify as a financial product — a decision that legal experts say could help bring greater regulatory clarity to the country’s digital asset sector.
The ruling was issued on Wednesday by the Financial Markets Authority (FMA), which said the classification arose from a financial technology sandbox pilot currently being run by the regulator. The stablecoin is pegged to the New Zealand dollar.
According to the FMA, the economic nature of the token means it does not meet the definition of a debt security because holders do not receive income, interest or any form of financial return from holding the stablecoin.
Legal experts welcome regulatory clarity
Law firm MinterEllisonRuddWatts — which said it advised ECDD Holdings, the issuer of NZDD, during its participation in the FMA sandbox — described the designation as a positive step toward regulatory certainty for stablecoins in the country.
However, the firm noted that the decision applies only to the specific version of the NZDD product described in the designation notice and should not be interpreted as a blanket ruling covering all stablecoins.
According to the firm, the decision reflects a pragmatic approach by the regulator toward financial innovation and aligns with regulatory developments seen in other jurisdictions, potentially laying the groundwork for clearer pathways for stablecoin oversight.
Sandbox pilot to expand with new license
The Financial Markets Authority also revealed plans to introduce a new “on-ramp” or restricted license for fintech companies participating in its sandbox program.
FMA chief executive Samantha Barrass said the initiative is designed to help innovative firms enter the market with certain restrictions in place, which can later be lifted as the companies grow and mature.
Research highlights growing interest in crypto within New Zealand. A 2024 report by Protocol Theory estimated that nearly half of the country’s 5.2 million residents either already invest in cryptocurrency or are considering doing so.
Meanwhile, analytics firm DataCube Research projects that New Zealand’s cryptocurrency market could reach a value of around $254 billion in the coming years.
