The Financial Markets Authority (FMA) is consulting on a proposed class designation that would declare qualifying New Zealand dollar-referenced and -backed stablecoins not to be financial products under the Financial Markets Conduct Act 2013 (FMC Act). The proposal aims to provide an interim pathway for qualifying stablecoin issuers ahead of wider stablecoin legislative reform. Submissions close at 5pm on 18 December 2026.
Links to the article and the consultation paper are available here and here.
Who needs to read it? Why?
All stablecoin issuers, prospective stablecoin issuers, digital asset exchanges, banks and stablecoin users should read the consultation to understand the new class designation and how it may apply to their products and services.
What does it cover?
The FMA’s proposed designation builds on the FMA’s 2026 designation for the NZDD stablecoin which is issued by ECDD Holdings Limited (ECDD). The proposed class designation will apply to stablecoin issuers who meet the qualifying features and ongoing requirements which include:
- each stablecoin must be issued for NZD$$1 and fully backed by New Zealand dollars held on bare trust at a New Zealand-registered bank;
- the stablecoin must be redeemable at face value subject to commercially reasonable restrictions on eligibility, compliance, redemption, timing and fees;
- the stablecoin pays no income, interest or other gain generated by the issuer or a related party; and
- the issuer must maintain full backing, publish monthly reserve confirmations and annual independent verification results, and state its reliance on the designation online.
Qualifying issuers would not need individual FMA approval and the designation would allow both retail and wholesale investors to hold the qualifying stablecoins.
Our view
The proposed class designation would cover both existing and potential future NZD stablecoins using exactly the same structure as ECDD’s stablecoin. While this is a positive step, in our view, the FMA should consider a broader designation to cover alternative structures. In reality, stablecoin design has already evolved beyond the ECDD model, particularly as overseas regimes have been put in place, meaning a limited designation may not be fit-for-purpose. This must be balanced, of course, against the FMA’s position that this is inevitably a temporary step while a more comprehensive legislative and/or regulatory response is developed. We will prepare a submission on these points, and we encourage other stablecoin issuers or interested parties to do so as well.
What next?
Submissions are due by 5pm on Friday 18 December 2026. If you would like assistance with a submission or understanding how the proposal could affect your business, please contact one of our experts.
This article was co-authored by John Anayi, a Solicitor in our Financial Services team.
Key contacts
Speak with one of our experts.
