The Financial Markets Authority (FMA) has issued a designation notice declaring that the ECDD Holdings Limited (ECDD) New Zealand dollar denominated stablecoin (NZDD) is not a financial product under the Financial Markets Conduct Act 2013 (FMC Act). The first-of-its-kind designation was announced alongside the FMA’s broader media release issued today.
This news alert focuses on the designation notice, which came into force on 11 March 2026. MinterEllisonRuddWatts acted for ECDD in relation to its participation in the FMA's sandbox pilot, which culminated in the designation. The designation is of particular significance for the development of the digital assets market in New Zealand, particularly in the payment stablecoin space.
Links to the designation notice and the FMA media release are available here and here.
Who needs to read it? Why?
This update is relevant to stablecoin issuers and prospective issuers, digital asset exchanges and platforms, payment service providers and fintechs, banks and financial institutions considering stablecoin integration or custody arrangements, businesses exploring stablecoin payment rails, and investors with exposure to the New Zealand digital assets market. The designation provides an important step toward regulatory clarity on the treatment of stablecoins under the FMC Act and will be of significant interest to those operating in, or considering entry into, this rapidly evolving space.
What does it cover?
ECDD is the issuer of the NZDD stablecoin. In summary, a holder receives one NZDD stablecoin on payment of NZ$1 to ECDD, which holds the corresponding funds on bare trust in a New Zealand-registered bank account for the benefit of NZDD holders.
The designation notice declares that the NZDD stablecoin is not a financial product under the FMC Act.
In granting the designation, the FMA notes the following reasons (in summary):
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The NZDD stablecoin is not an investment – it pays no income, interest or gain to the holder, and its practical use is as a means of payment or remittance.
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The risks of acquiring the stablecoin are not substantially different from the risks of the underlying reserve assets, which are not subject to regulated offer requirements under the FMC Act.
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Regulating it as a debt security would confuse consumers, given its substance as a payment mechanism rather than a financial product.
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Its continued availability will promote efficiencies in payments and remittance markets.
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Disclosure obligations under the FMC Act would add no practical value, as the underlying reserve assets are already excluded from such obligations.
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The issuance of the NZDD remains a financial service subject to the fair dealing provisions in Part 2 of the FMC Act.
Why is this important?
With the global stablecoin market capitalisation now exceeding USD300 billion, and annual stablecoin transaction volumes surpassing USD33 trillion in 2025, stablecoins have rapidly become a significant component of global payments infrastructure. Their appeal stems from the ability to transfer value quickly, at low cost, and on a 24/7 basis, offering greater efficiency than many traditional payment rails. Regulators internationally are moving to establish clearer frameworks for stablecoin issuance.
Against this backdrop, the FMA’s designation of the NZDD stablecoin is an important step toward providing some regulatory certainty for stablecoins in New Zealand. However, it is important to note that the designation relates to a specific product and version of a stablecoin, being the NZDD in the form described in the designation notice, and does not constitute a general determination as to the regulatory treatment of all stablecoins under the FMC Act. We are continuing to work with the FMA and through BlockchainNZ on the broader development of the stablecoin regulatory framework in New Zealand, including exploring new pathways for different types of stablecoins, such as those backed by different classes of assets.
Nevertheless, the designation signals a pragmatic approach by the FMA to financial innovation that is consistent with developments in comparable jurisdictions, and provides a foundation from which further pathways can be developed. The proposed plan, as announced by the FMA today, to introduce on-ramp licensing is consistent with this objective.
Drawing from our experience acting for five out of six participants in the sandbox pilot, we agree that the pilot has been a valuable exercise, providing participants with practical insight into the opportunities and challenges presented by financial innovation and new technologies, highlighting areas where existing regulation may benefit from development, and generating real-world insights for the industry and policymakers alike. The expansion of the sandbox to focus on on-ramp licensing will certainly benefit a wider range of firms.
If you have any questions about how these developments may affect your business, or about any fintech regulatory or sandbox matters, please contact one of our experts below.
This article was authored by Olivia Maher, a solicitor in our Financial Services team.
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