New Zealand’s Financial Market Authority (FMA) has opened a consultation into tokenization running through to the end of October. This year the regulator has received a steady stream of inquiries regarding tokenization, but few have come to fruition. The regulator wants to determine whether regulation is creating barriers.
The FMA team is aware that tokenization activity favors incumbents that are already regulated. For startups, there’s the expense and learning curve of applying for licenses. FMA staff are concerned that this encourages startups to explore operating outside the current regulatory perimeter to avoid the burden. This path reduces consumer protections.
We’ve seen plenty of evidence of this around the world, especially with startups that avoid targeting their own jurisdiction and offer products to foreign markets where the regulatory barriers may be lower.
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