New Zealand Tightens Crypto Regulations for 2025 Transparency

New Zealand has adopted a unique approach to cryptocurrency, treating digital currencies as property rather than actual money. This stance has allowed crypto trading to become legal in the country since 2018, when it was recognized as property for tax purposes. The nation's approach to digital asset investments is characterized by a growing interest and a focus on clever regulatory strategies.

By 2025, New Zealand is tightening its regulatory framework to enhance transparency and combat tax evasion. While specific crypto laws have not been enacted this year, the country has indirectly impacted the crypto industry through fintech regulations. The Organisation for Economic Co-operation and Development’s (OECD) Crypto-Asset Reporting Framework (CARF), implemented through the Taxation Act 2025, aims to establish rules for crypto asset service providers (CASPs) and mandate reporting obligations for crypto transactions. This legislation is set to come into effect in 2025, enhancing transparency and combating tax evasion in the crypto space.

Additionally, the Conduct of Financial Institutions (CoFI) legislation introduces fair conduct principles for financial institutions, including those dealing with crypto assets. Although this legislation does not directly regulate crypto as a financial product, it impacts how financial institutions conduct themselves when dealing with crypto assets. The Financial Markets Authority (FMA) has also announced a regulatory sandbox for 2025, allowing fintech companies, including developing blockchain corporations, to test innovative products under supervision. This sandbox fosters collaboration between the government and the crypto industry, promoting consumer protection and market integrity.

The Consumer and Product Data Act introduces a legislated consumer data right (CDR) in the financial sector. While this law does not directly regulate crypto, it can indirectly impact data rights and data sharing in the digital industry and blockchain developments. The FMA, as the key regulator of cryptocurrency and digital assets in New Zealand, is focusing on licensing and tax regimes while releasing warnings against crypto scams in the region. The agency has highlighted the risks associated with the decentralized nature of crypto, making it difficult to identify the entities offering services and increasing the risk of theft.

In terms of licensing, while there are no specific crypto licenses in New Zealand, crypto asset service providers (CASPs) and wallet service providers must register with the FMA as financial service providers (FSPs) to obtain a crypto license to continue operations. Compliance with anti-money laundering (AML), counter-terrorism financing (CFT), and know-your-customer (KYC) obligations is mandatory for CASPs, wallet service providers, and businesses involved with crypto. Entities providing digital asset services may be required to report their transaction and other information to the FMC, especially if any suspicious activity is discovered.

Regarding crypto tax, capital gains tax (CGT) does not apply to crypto in New Zealand, as it considers crypto as property. Earning and disposing of crypto is subject to general income tax in New Zealand. The Inland Revenue Department (IRD), the key advisor on government tax policies, stated that if individuals acquire crypto assets to dispose of them, they need to pay income tax on any profit made. Losses from selling crypto assets may also be claimable. The income tax brackets for the years 2024-2025 and 2025-2026 have been adjusted, with rates ranging from 10.5% to 39% depending on the annual income.

Crypto adoption in New Zealand is projected to grow, with a user penetration rate expected to increase from 33.59% to 34.78% by 2026. The number of crypto users is anticipated to reach 1.84 million by 2026. Crypto revenue is projected to reach US$174.1 million in 2025, with an annual growth of 15.37%, resulting in a projected total amount of US$200.8 million by 2026. However, there is no public information available on the government’s crypto holdings in New Zealand, and no indication or evidence that the government is investing or holding any digital assets.

Despite legal uncertainties, the crypto market in New Zealand is growing as the popularity of digital assets has spread worldwide. The government of New Zealand is currently taking a “wait and see” approach to cryptocurrency, not providing much clarity in the regulations. If the country provides legal transparency on digital assets, it may boost the adoption rate and expand the national economy. The FMA's focus on licensing, tax regimes, and combating scams, along with the introduction of the CARF and CoFI legislation, indicates a developing, cautious friendliness towards crypto in New Zealand.