New Zealand’s FMA proposes exempting fully backed NZD stablecoins

By Tom Whitfield

On November 9, 2026, New Zealand’s Financial Markets Authority opened a consultation on exempting qualifying New Zealand dollar-backed stablecoins from financial product rules under the Financial Markets Conduct Act, better known as the FMC Act.

According to the FMA’s proposal, a repeatable exemption would require two conditions: full backing in New Zealand dollars held at registered banks, and redemption at face value on a 1:1 basis. Tokens meeting both tests would not be classified as financial products under the FMC Act.

What standards would qualify a token?

The FMA calls these instruments “payment stablecoins,” meaning tokens referenced to and backed by the New Zealand dollar. The category would not create an automatic exemption; each token would need to satisfy the proposal’s safeguards.

First, qualifying coins must be fully backed by New Zealand dollars held at registered banks. Second, holders must be able to redeem their tokens at face value, on a 1:1 basis. A token must meet both conditions to qualify for the exemption.

The proposal draws a firm eligibility line. A token that satisfies both tests could qualify for the exemption, while one that misses either condition would remain outside the proposed pathway, even if an issuer otherwise describes it as NZD-linked.

Under that structure, the reserve requirement places registered-bank custody of NZD at the center of the operating model. Issuers pursuing another reserve model would not gain access to the exemption as currently proposed.

How does this differ from the March 2026 ruling?

In March 2026, the FMA issued a designation confirming that NZDD stablecoins are not treated as financial products. That designation settled one specific case; the consultation would turn the outcome into a repeatable route for other qualifying issuers.

Who is being consulted?

The consultation invites input from stablecoin issuers, financial institutions, digital asset businesses and consumers. For issuers, the benefit is classification clarity: rather than leaving each token’s status open-ended, the proposal provides defined reserve and redemption criteria.

What changes for issuers and consumers?

For consumers, the headline protection is redemption at face value. Under the proposal, a holder could redeem the token for exactly one New Zealand dollar within the qualifying framework.

FMA leadership has stressed that stablecoins are “primarily payment instruments, not investments.” That position supports a targeted exemption for qualifying payment tokens, not a blanket exemption for every NZD-linked token.

Is this the final regulatory framework?

The FMA has framed the initiative as an interim measure, designed to operate until comprehensive digital asset regulation is introduced. The proposal addresses a defined class of payment stablecoins while leaving broader regulation for a later framework.

If adopted, the pathway would replace one case-specific designation with standardized eligibility criteria: NZD reserves at registered banks and 1:1 redemption. The consultation outcome will determine whether that market-structure change proceeds and on what terms.