The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko is seeking feedback on the implications of a growing market for tokenised products.
Tokenisation is the process of turning real or virtual assets into digital tokens that can be stored and traded on a blockchain. Overseas, tokenised products include financial assets like bank deposits, bonds, and managed funds, as well as real-world assets like real estate and cryptocurrency.
FMA General Counsel Liam Mason said: "The pace of technological development is rapid and tokenisation, like other emerging technologies, has potential to influence the development of New Zealand financial services.
"The FMA has to balance ways to better support innovation and reduce regulatory barriers for companies and innovative products, while, at the same time, protecting consumers from harm.
"We are releasing a discussion document today that aims to encourage the industry to share views about the current use and future potential of tokenisation here.
"We want to better understand the implications of tokenisation in New Zealand's financial markets, including emerging risks and opportunities.
"We're also exploring whether current regulatory settings are helping or hindering responsible innovation of new products and services being offered in the digital asset markets, and to gather views on what the FMA could do to support innovation, improve regulatory certainty, and enhance consumer protection now and into the future.
"Having a constructive conversation with industry enables us to respond faster and make adjustments to rules and licence conditions and seek law reform where needed to remove regulatory barriers or to enhance consumer protection.
The FMA is committed to being a pro-innovation, engagement-led, and technology-neutral regulator, ensuring that New Zealand's financial markets legislation and regulatory framework remain flexible and non-prescriptive."
Liam said this was an opportunity for New Zealand innovators and leaders to get involved in designing regulatory frameworks that work for emerging technologies, for firms, and for consumers.
View the discussion paper: Tokenisation in the financial markets
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