The recognition of cryptocurrency as property in New Zealand signals a pivotal evolution in the understanding of asset classes, one that challenges conventional licit setups and demands fresh interpretation. As E-technologies continue to transform the global economy, the polity has steadily transitioned from treating E-money as an experimental innovation to acknowledging it as an integral part of modern fiscal setups.
Over the past decade, the role of E-assets in the region’s business environment has grown significantly. E-money has moved beyond the margins of speculative trading and is now embraced as a legitimate fiscal tool. The number of crypto-related deals continues to rise, financing flows are increasingly tokenised, and companies are incorporating blockchain technology into their setups for record-keeping, value storage, and fiscal reporting. These developments require a sophisticated understanding of how E-assets operate within the extensive licit and commercial context.
When cryptocurrencies become part of contractual agreements, succession planning, or licit disputes, clarity around their licit classification becomes essential. Whether an E-asset is recognised as property has profound implications. It determines how rights are assigned, how proprietorship is safeguarded, and how onuses are enforced under the polity’s statute. It also acts a vital role in excise abidance, the licit utilisation of E-money as security or equity, and in insolvency proceedings—particularly when it comes to prioritising creditor claims.
The licit treatment is shaped by a combination of judicial choices, evolving edict, and commercial practice. The courts have increasingly leaned towards recognising E-money as a form of property, aligning the licit way with the realities of the E-economy. This interpretation brings with it several benefits: it grants cryptocurrencies protection under property statute, facilitates their inclusion in commercial deals, and enables their use in more complex licit structures.
The polity stands out as a jurisdiction that embraces technological innovation while handling statutory clarity. It has cultivated an environment where financiers and trades can partake with E-holdings with a fair degree of licit certainty. The state’s way is one of balance—asserting that the use of E-money remains open and accessible, while also safeguarding the interests of market partakers and upholding the integrity of the fiscal setup.
This article explores the licit character of cryptocurrency in the polity. It examines the statutory stance on proprietorship, the practical implications for trades, and the prospective perils and opportunities that arise as this new asset class continues to shape the fiscal sphere.
Licit status of cryptocurrencies
E-money in the polity does not hold the status of licit tender. It is not issued by the RBNZ, lacks government backing, and does not fall under the definition of fiscal instruments as outlined in the Securities Act. This places it outside the parts of conventional money or listed securities. Nonetheless, E-money possesses the essential parts of property—it can be conveyed, assigned value, used for deals, and securely stored in E-form.
The country’s licit understanding of E-money revolves around the idea of a unique digital code maintained on a decentralised ledger setup. While intangible and incapable of physical possession, E-money is subject to licit oversight. Proprietorship is defined by the possession of a private key, which serves as the licit indicator of oversight over the asset. Its value is known by market demand and the ability to exchange it, while its security and consistency are maintained through cryptographic algorithms. These factors collectively establish its classification as a form of intangible property.
In the polity, licit proprietorship of E-holdings does not depend on physical possession. What matters is exclusive access to the asset. Under this principle, E-money is considered intangible property—an asset without physical form but one that remains licitly safeguarded. Similar to intellectual property rights, software licences, or digital equity interests, E-money represents a unit of value and the licit right to oversight it equates to proprietorship.
A key confirmation of E-money’s property status in the polity comes from the Inland Revenue Department (IRD). In its official excise guidance, the IRD clearly classifies E-holdings as a form of property. This means E-money deals are subject to income levy, capital gains tax, and must be in fiscal and trade reporting. The excise reinforces the formal recognition of cryptocurrencies as licitly acknowledged holdings.
The RBNZ has confirmed that cryptocurrencies do not hold the status of licit tender. However, the FMA has stated that if an E-token lacks the parts of an investment product, it can be regarded as ordinary property. This position strengthens the legitimacy of E-money use in commercial deals, settlements, and corporate accounting within the country.
While the polity has not enacted a single statute expressly defining E-money, its courts have taken a proactive way. General principles of civil statute are applied to E-holdings, enabling them to be treated similarly to tangible goods or licit claims. As a result, E-money can be licitly composed in inheritance estates, trade balance sheets, and asset liquidation processes.
A landmark case in this area was Ruscoe v Cryptopia Ltd [2020] NZHC 728. The case arose during the insolvency of the Cryptopia cryptocurrency exchange, where the central licit issue was whether the crypto holdings held in company accounts were owned by the exchange or its users. The High Court ruled that the E-monies were held in trust for the users and did not form part of the firm’s estate. Therefore, they could not be distributed to creditors but had to be retrieved to their rightful owners.
This decision was a turning point. It marked the first time a New Zealand court formally recognised E-money as property under private statute. The ruling affirmed that E-money proprietorship is licitly protectable, provided access and oversight are established. The judgment also emphasised the relevance of equitable principles, describing E-holdings as “determinable, identifiable, and subject to control”, making them suitable for protection under the statute. The outcome laid the basis for future edict of E-money in areas such as bankruptcy, inheritance, and corporate proprietorship.
The Cryptopia case demonstrated the polity’s licit setup’s willingness to adapt existing private statute principles to accommodate the E-economy. Rather than developing a separate licit setup for blockchain holdings, the courts opted to interpret them within the conventional property statute model. This pragmatic way has offered licit certainty and consistency, enabling both people and trades to incorporate E-money into their fiscal plans and reporting structures.
Cryptocurrencies differ from conventional forms of property such as shares, bonds, or fiat money. They do not confer shareholder rights like equities, nor do they represent a debt obligation from an issuer, as bonds do. Furthermore, unlike conventional currencies, cryptocurrencies are not backed by a central authority and there is no licit obligation to accept them as remittance. Yet, in many respects, they resemble other intangible holdings—particularly those associated with digital proprietorship. E-money represents a transferrable and measurable form of value, unattached to physical substance, yet fully recognised and safeguarded under the polity’s statute.
Table: Comparison of cryptocurrencies with other forms of property in the polity
|
Criterion |
Cryptocurrency |
Fiat money |
Securities (shares, bonds) |
Real estate / physical property |
|
Form |
Digital, intangible |
Physical or non-cash (electronic) |
Digital or paper |
Physical |
|
Registration of rights |
Not needed (proprietorship is known by access to the private key) |
Not needed |
Needed (in company registers or the Central Bank) |
Needed (via land registry) |
|
Broadcast |
Through blockchain deals, instant transfer of rights |
By remittance/transfer |
Through an agreement and an entry in the register |
Through the contract and registration of the transfer |
|
Asset oversight |
Via a cryptographic key |
Through physical possession or bank access |
Through registration and disposal |
Through physical oversight or proprietorship |
|
Licit regime in case of loss of access |
Cannot be restored without a key |
Can be restored |
||
|
Levy |
As property (conforming to IRD Guidance) |
Income is leviable, but the property itself is not. |
Subject to income tax if acquired for resale or in the course of a trade/commercial plan |
Subject to proprietorship/income taxes |
|
Regulators |
IRD, FMA, FIU, RBNZ |
RBNZ, Treasury |
FMA |
Ministry of Justice, Land Services |
|
Unique perils |
Key loss, volatility, statutory gaps |
Inflation, rate |
Issuer risk, loss of liquidity |
Wear and tear, loss, boundary disputes |
Proprietorship and oversight of the private key
From a licit standpoint, the vital factor is not merely the possession or storage of an asset, but the ability to exercise oversight over it. In the world of blockchain and E-currencies, proprietorship is established through access to a private key. This key grants the holder the power to oversee and transfer the E-asset—effectively defining licit proprietorship. Once the private key is lost, it cannot be recovered, and with it, the ability to assert proprietorship or claim licit protection disappears entirely.
This issue becomes particularly significant in situations such as the inheritance of cryptocurrency in New Zealand, or in cases involving insolvency or disputes over E-holdings. In such instances, the absence of a private key can result in irreversible loss, with no recourse through conventional licit mechanisms.
A further layer of complexity arises when cryptocurrencies are held in custodial storage. If E-holdings are stored on an exchange, actual oversight often lies with a third party rather than the asset’s beneficial owner. This arrangement introduces fiduciary responsibilities, not unlike those found in conventional banking relationships. In the polity, this model demands careful licit scrutiny. Proper contractual setups must be in place to govern the storage, management, and transfer of crypto holdings, asserting abidance with local statutes and providing clarity in the event of disputes or succession.
Legal setup for cryptocurrency regulation
The polity regulates E-money through a flexible, function-based licit way. Rather than enacting a dedicated statute to govern all E-holdings, the state has opted to adapt its existing legislative setup to the evolving parts of blockchain and virtual currencies. This adaptable model enables swift responses to technological innovation while asserting licit stability and clarity. Oversight responsibilities are shared among several government bodies, each with its own distinct mandate—from fiscal oversight to consumer protection and tax abidance.
This oversees the fiscal edict of cryptocurrency in the polity, particularly in relation to tokenised financing products. Its supervisory role extends to offerings that fall under the parts of securities, derivatives, or overseen speculation schemes. The polity applies a function-over-form principle in classifying crypto holdings. If a token supplies fiscal entitlements—such as a share of profits, voting rights, or authority over holdings—it may be classified as a security. In such cases, the offering is subject to disclosure, licensing, and abidance needs under the Financial Markets Conduct Act 2013.
The IRD focuses on the levy of E-monies. In its official guidance, E-money is treated as property. This licit characterisation affirms the government’s authority to tax any increase in the value of E-holdings, their commercial use, as well as income generated through mining and staking plans. Trades and people must meet tax onuses by handling accurate records and transparent bookkeeping. Particular scrutiny is given to companies using E-currencies as a form of remittance or settlement, as they are needed to adhere strictly to New Zealand’s tax edicts concerning E-holdings.
While the RBNZ does not recognise E-money as licit tender, it closely monitors the sector due to its prospective to affect the country’s fiscal setup. The Bank’s interest lies primarily in assessing the broader implications of crypto on systemic stability, as well as exploring the future introduction of a central bank digital currency (CBDC). In monetary terms, the edict of blockchain holdings remains limited, but the RBNZ continues to analyse prospective perils to the integrity of remittance setups.
Operating under the New Zealand Police, the FIU is responsible for enforcing AML and CFT statutes as they apply to E-money. VASPs—such as exchanges and wallet platforms—are regulated under the Financial Crimes Act 2009. These firms must abide by strict onuses, including registration, customer due diligence (CDD), transaction oversight, suspicious plan reporting, and the implementation of internal oversight procedures. In effect, managing or operating a crypto-related business in New Zealand entails statutory responsibilities on par with conventional fiscal institutions.
New Zealand’s regulation of the E-money sector is anchored in existing licit instruments rather than a unified crypto statute. The key legislative acts currently applied to the E-asset space include:
- Financial Markets Conduct Act 2013 (FMCA) – This governs token offerings where the E-asset functions as a speculation instrument.
- AML/CFT Act – This statute sets out registration, oversight, and reporting onuses for Virtual Asset Service Providers.
- Companies Act 1993 – This applies to all corporate structures involved in E-money plans, specifying management responsibilities, registration processes, and disclosure needs.
Personal Property Securities Act 2007 – This governs licit matters related to the transfer of crypto holdings during liquidation, creditor claims, security interests, and inheritance of E-property.
Licensing and registration
The polity has adopted a nuanced and flexible legal setup for the edict of cryptocurrencies. Rather than imposing a single, overarching statute for E-holdings, it evaluates each trade model individually to determine whether its operations align with the parts of a fiscal service. This targeted way ensures that edict is applied where necessary—specifically where the interests of consumers, financiers, or fiscal stability may be impacted—without stifling innovation.
Registration of VASPs
VASPs are trades that carry out professional services involving cryptocurrencies or other E-holdings on behalf of clients. These may include the exchange, storage, transfer, or management of such holdings. If their services meet the legal definition of a fiscal service, they are deemed fiscal service providers and must be registered on the Financial Service Providers Register (FSPR).
- Exchanging E-money for fiat currency or for other cryptocurrencies
- Providing custodial storage for cryptocurrencies
- Managing E-holdings, either on behalf of the trade or for clients
- Facilitating the transfer of virtual holdings between wallets or accounts
FSPR registration is a licit requirement for any firm wishing to be recognised as a legitimate partaker in the polity’s fiscal sector. This process involves disclosing key corporate information, including the firm’s licit name, physical address, proprietorship structure, range of services, and the designated people responsible for statutory abidance and customer due diligence.
Each registered provider is issued a unique FSPR number, which is essential for various trade plans, such as opening bank accounts, entering into contracts, and demonstrating licit abidance to third parties. However, this registration can be revoked if a firm breaches licit needs or submits false information, which would lead to a prohibition on further trade operations.
In essence, registering as a VASP is the foundational licit step for any E-money business in New Zealand that partakes in the handling or management of virtual holdings. Still, in many instances, this is only the first stage in a more layered statutory process.
When is FMA licensing needed?
Additional authorisation from the FMA becomes mandatory when an E-asset or token is used as a speculation instrument. This applies where the token supplies rights to income, participation in decision-making, profit-sharing, or mirrors the parts of conventional securities such as shares, bonds, or derivatives.
Under such circumstances, the E-asset is classified as a fiscal product and falls under the scope of the FMCA. The issuing company is then needed to apply for a cryptocurrency licence from the FMA. This process includes the preparation of an investment disclosure document—commonly an investment memorandum—and full transparency regarding the associated perils.
- Offered to the public
- Used as a fundraising mechanism
- Marketed with an investment objective
Failure to obtain a licence in these situations constitutes a breach of fiscal statute, even if the token itself is structured as software code. The focus is not on the technical nature of the asset but rather on its economic function and the expectations it creates among prospective financiers.
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AML/CFT setup and trade responsibilities
The polity has adopted a structured and rigorous way to regulating E-money plans, particularly in the areas of AML/CFT. These measures are governed under the Financial Crime Act 2009 and apply comprehensively to VASPs.
All VASPs operating in New Zealand must abide by a set of clearly defined onuses. These include conducting customer due diligence, overseeing deals and the origin of funds, and reporting suspicious plans to the FIU. Importantly, these needs apply to both domestic and cross-border deals, which is particularly critical given the international nature of many E-money operations.
Failure to abide by these onuses can result in significant licit consequences, ranging from administrative penalties and frozen deals to criminal prosecution. Consequently, companies engaging in crypto-related business in New Zealand must ensure that robust internal abidance setups are in place. This includes the establishment of sound internal oversights, the appointment of abidance officers, and ongoing oversight. Such setups are not only essential for meeting statutory onuses, but also vital when working with banks, financiers, and commercial partners, who often consider a strong AML/CFT setup a prerequisite for cooperation.
The increasing integration of E-money into mainstream fiscal plans is changing how businesses in New Zealand manage their holdings. Cryptocurrencies are no longer viewed as experimental instruments. Instead, they are being adopted for various corporate purposes—such as remittance processing, capital raising, and speculation—and are now part of standard trade practice. This shift demands strict adherence to licit, excise, and accounting edicts, and a nuanced understanding of how E-holdings are classified and taxed.
The polity offers a clear and consistent setup for the levy of cryptocurrencies. E-tokens are treated as property, and their use or sale is therefore subject to general excise principles. Companies working with E-money must account for all deals within the standard excise setup.
Resident companies are taxed on their worldwide income, including that earned from crypto-related plans. The standard corporate excise rate is 28%, and it applies to income derived from trading, speculation, or receipt of remittance in E-money. In contrast, non-resident entities are taxed only on income sourced within New Zealand. For cross-border crypto dealings, the principle of territorial levy applies, though this is limited by the provisions of existing double levy agreements. Where the income is deemed to have originated within the polity—for example, through consulting contracts or the provision of services involving E-money—it is in the leviable income base.
New Zealand’s taxation regime for E-money is guided by the principle of economic substance. Income is recognised at the point where an economic benefit is received. If a firm sells goods or services in exchange for E-money, this is treated as leviable income. Similarly, if an E-asset appreciates in value and is subsequently sold, the resulting capital gain is leviable. Conversely, losses incurred from price drops may be deductible—provided they are properly documented and linked to commercial operations.
The valuation of E-money for excise purposes is based on its market value at the time of the deal. The IRD accepts either official exchange rates or other recognised valuation sources. Trades are needed to maintain detailed records, especially when E-holdings are used for deals, held on exchanges, or invested. Every deal must be documented with the value and intended use of the E-money clearly identified.
Beginning in 2025, the polity will implement the OECD’s Global Minimum Tax (GloBE) rules as part of its commitment to international excise cooperation and combating base erosion. These rules target large multinational groups with consolidated revenues of €750 million or more. Three core mechanisms will be introduced: the inclusion of global income, levy of previously untaxed profits, and the accounting of domestic income.
For crypto-focused trades operating within a multinational structure, this may carry significant implications. For instance, if tokens are held abroad but generate revenue linked to the polity’s operations, that income may be captured under the GloBE principles. This will require trades to carefully assess and prospectively restructure their international models involving E-holdings to avoid unintended excise exposure.
New Zealand’s GST system—equivalent to VAT—imposes a 15% charge on all leviable supplies of goods and services. When E-money is used in a trade context, it may fall under GST onuses. Exceptions may apply if the E-money is used solely as a medium of exchange or as a financing, but each case must be evaluated based on the nature and purpose of the deal.
In certain instances, foreign suppliers of remote E-products are also needed to register for GST in New Zealand. This applies particularly where E-money is used in deals involving offshore structures and the polity’s occupants, especially in the supply of intangible services. These deals must be carefully assessed in line with GST thresholds and abidance onuses for non-resident suppliers.
E-money in accounting
The accounting treatment of cryptocurrency assets in New Zealand follows the general principles applied to intangible holdings. Although often referred to as a "digital currency," E-money is not recognised as currency for accounting purposes. Instead, its classification depends on how it is held and used—whether as a commodity, a financing, or another type of asset.
When E-money is held for short-term use, it is classified as a current asset. Conversely, if tokens are retained as a longer-term financing, they are treated as non-current holdings. The distinction is vital for preparing fiscal statements that are accurate and compliant with New Zealand’s statutory standards.
In corporate reporting, E-money holdings must be clearly disclosed, along with the valuation method applied, the acquisition date, and the licit basis of proprietorship. Upon sale of the tokens, the resulting income is recorded, while gains or losses from exchange rate differences during revaluation are reported under other profits and losses. These disclosures form part of transparent fiscal reporting practices that reflect the actual fiscal position of the firm.
Transfer of E-money in commercial deals and inheritance
When E-money is conveyed during trade deals—such as in the course of liquidation—the polity’s statute requires adherence to formal procedures. Licit proprietorship is recognised when effective oversight of the private key is conveyed. It is essential that corporate records include the date of transfer, the value of the E-money at that point, and formal evidence of the deal to ensure it is appropriately accounted for.
In matters of inheritance, E-money presents certain challenges. Unlike conventional holdings held in banks, E-holdings are not accessible without knowledge of the associated private keys. If access is lost, recovery is virtually impossible. For this reason, it is recommended that people include details of crypto wallets and access credentials in their will or trust documentation. Under the polity's statute, E-money is treated as part of the deceased’s estate and can be licitly distributed to heirs, provided appropriate access mechanisms are in place.
Treatment of E-money in liquidation or bankruptcy
In the context of company liquidation or bankruptcy, E-money held by a trade is composed in the pool of distributable holdings. The landmark case Ruscoe v Cryptopia Ltd established that such E-holdings may either be retrieved to clients or distributed among creditors, depending on the structure of proprietorship.
In some cases, a liquidator may need to partake with a technical expert to access or recover the E-holdings in question, particularly when dealing with secure wallets or encrypted storage setups. This highlights the importance of accurate documentation and secure access protocols as part of sound corporate governance and insolvency planning.
Licit perils and protection of trade interests when working with cryptocurrencies
The growing use of E-money in New Zealand’s business environment offers exciting opportunities—but it also demands meticulous licit planning. The statutory setup surrounding E-holdings remains fluid and decentralised, creating a sphere filled with prospective pitfalls. Trades must be particularly cautious with regard to levy, licit liability, reporting needs, and statutory onuses. Identifying licit perils early allows for the development of robust protective strategies, ultimately reducing exposure to adverse outcomes.
While cryptocurrencies are acknowledged by the polity's courts and referenced in various statutory guidelines, there is currently no singular, comprehensive statute that governs all aspects of E-asset usage. This legislative gap creates ambiguity—especially when dealing with cross-border deals, structuring of financing tokens, or launching new E-products. For trades looking to scale or attract international financiers, this lack of clarity can hinder growth and complicate strategic decision-making.
Legal ownership of digital assets in New Zealand is tied directly to oversight of the private key. In practice, this means that losing access to the key is tantamount to losing the asset itself. Without adequate documentation or secure key storage, a firm could irreversibly forfeit valuable E-property. The issue becomes particularly urgent during changes in company leadership, disputes between shareholders, or liquidation. To mitigate such perils, trades must implement clearly defined internal protocols and licitly enforceable setups for private key management.
Many E-money-based deals in the polity do not follow the standard structures of corporate statute. As a result, proving the intention of the parties, clarifying settlement terms, or pinpointing the moment proprietorship changes hands can become complex. The unique nature of crypto holdings calls for tailored contractual documentation—contracts must outline key transfer onuses, settlement terms, liability provisions, and consequences in the event of a breach.
Cryptocurrency exchanges and custodial platforms in New Zealand are not regulated in the same way as conventional banks or licensed fiscal institutions. This absence of oversight significantly reduces licit protection when holdings are held by third parties. If an exchange ceases operation or is compromised in a cyberattack, asset recovery is often problematic. In this context, fiduciary responsibility and the licit status of E-money custodians become essential. When selecting storage solutions or custodial providers, it is vital to verify their jurisdiction, licit standing, asset management protocols, and their liability in case of loss.
Tax treatment of cryptocurrency in New Zealand is evolving rapidly, with the IRD issuing more detailed guidance. However, grey areas persist—particularly concerning whether profits are classified as capital gains or as trade income. Misclassification can lead to additional excise assessments, fines, and contentious disputes. To remain compliant and avoid unexpected liabilities, companies must engage advisers who specialise in the excise treatment of digital assets within the New Zealand context.
In licit disputes concerning E-asset proprietorship, documentation is vital. Courts require evidence of proprietorship structures, internal governance rules, and access rights to determine who licitly holds the assets. Without such proof, judicial protection becomes unlikely. Precedents, such as the Cryptopia case, demonstrate that courts are prepared to uphold E-rights when supported by clear documentation. It is therefore essential to maintain comprehensive records covering all aspects of E-asset custody and management, well before any dispute arises.
Conclusion
E-money has been formally recognised as property in New Zealand through case law and statutory interpretation. The decision in Ruscoe v Cryptopia Ltd confirmed the licit way of treating E-holdings as property that can be safeguarded and conveyed. This position is supported by both excise authorities and statutory actions. However, the licit setup continues to evolve in response to the challenges posed by technological developments and the increasing volume of E-money deals.
Trades should be aware that New Zealand’s excise and accounting rules, AML/CFT onuses, and contract statute needs apply directly to token deals. Companies that hold or accept E-money must abide with reporting needs, structure E-asset deals properly, and ensure appropriate custody. These onuses apply not only during regular trade operations but also in liquidation or bankruptcy, where identifying holdings, determining proprietorship rights, and abiding with edicts are essential.
Safe and licit operations involving E-money require professional guidance. Our licit team offers support in the regulation of blockchain assets in New Zealand, transaction structuring, excise planning, dispute protection, and assistance with E-finance projects. We help trades adjust to licit needs, reduce perils, and take full advantage of opportunities in the crypto market, while accounting for all licit considerations.
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