New Zealand’s FMA: all tokens are securities

New Zealand’s Financial Markets Authority publishes commentary ICOs and cryptocurrency services 
27 October 2017   2760

New Zealand’s Financial Markets Authority publishes guidance on ICOs and cryptocurrency services, as the FMA wants to "facilitate responsible innovation, and ensure that the regulatory regime remains relevant and agile". 

Initial coin offerings 

The extent to which an ICO is regulated depends on whether a "financial product" is being offered to retail investors in New Zealand. The Financial Markets Conduct Act 2013 sets out four types of financial product:

  • debt securities
  • equity securities
  • managed investment products
  • derivatives.

The FMA further explains each type of the product in detail. What's important, it has been clearly stated that all tokens are to be considered securities.

All tokens or cryptocurrencies are securities under the FMC Act – even those that are not financial products. A security is any arrangement or facility that has, or is intended to have, the effect of a person making an investment or managing a financial risk. If appropriate, we can designate any security to be a particular financial product based on its economic substance.
 

The FMA guidance

The guidance also highlights that crowdfunding in the form of an ICO is not the same as crowdfunding covered by the FMC Act. The FMA licenses crowdfunding platforms to provide an intermediary service via a facility, such as a website, where companies make offers to retail investors. Crowdfunding under the FMC Act enables companies to raise up to $2 million in any 12-month period, without registering a PDS.

It is stressed that the ideas regarding the possible regulation of ICOs and token offerings include creating a new category of prescribed intermediary service similar to the equity crowdfunding model. This would require law reform and that can take a long time. 

Cryptocurrency services

Tokens and cryptocurrencies that are not financial products or services must comply with the Fair Trading Act 1986 to the extent that they are “in trade.” Notably, the Fair Trading Act also applies to tokens and cryptocurrencies that are offered in New Zealand but based overseas.

The FMA points out that the FMC Act does not cover crowdfunding via ICOs, and encouraged stakeholders to engage in conversation with the regulator “early in the development phase if you’re considering making an offer.”

Neo Foundation to Withdraw $11M From Cold Wallet

These funds will be used to finance its operations in currrent reporting year and $190M are stiill in the vault
26 March 2020   992

On March 25, the Neo Foundation announced the withdrawal of 1,660,865 NEO ($ 11 million) from the cold wallet to finance its activities in the current reporting year. About $ 190 million are still in reserves.

According to rules established in the Neo White Paper, the NEO tokens maintained by the Neo Foundation are mainly used to continuously support Neo's technological development, ecosystem growth, community expansion and the normal operations of the foundation and related organizations. 

 

Neo Foundation

According to the publication, 1,660,865 NEOs were transferred “from a blocked account to a current account”. As the information on the blockchain shows, these funds were directed to an address containing 14.6 million NEO or about $ 100 million. The project does not disclose who controls this address and what fate awaits the released tokens.

White paper Neo suggests that project costs in any given year should not exceed 15 million tokens. In the near future, a financial report for 2019 will be published.

At the time of publication, NEO is the 23rd largest asset on the market with a capitalization of $ 479 million. The price of one NEO is $ 6.79.