Current State of Crypto Adoption in New Zealand
Source: Freepik
With traditional paths to financial security becoming increasingly out of reach, many Kiwis are turning to cryptocurrencies as a promising alternative. This trend is evident as many Kiwis are turning to digital assets as a viable alternative to build wealth and achieve financial independence.
A new survey conducted by Protocol Theory, in collaboration with Easy Crypto, New Zealand's leading cryptocurrency exchange, sheds light on this growing trend. According to the findings, nearly half of New Zealanders have either already invested in cryptocurrencies or are seriously considering doing so in the future.
The survey indicates that around 50% of New Zealanders have owned, currently own, or plan to invest in crypto in the near future. This trend highlights a significant shift in investment preferences, as more people become dissatisfied with conventional financial systems.
One of the main attractions of cryptocurrency for New Zealanders is its potential to reduce profits for traditional financial institutions. About 33% of respondents expressed that investing in crypto offers a way to minimize the influence of banks and corporations.
This influence is often seen as a barrier to their financial independence. Interestingly, 60% of survey participants believe they can make small, incremental investments in cryptocurrency over time, compared to only 16% who feel the same about real estate.
This perception points to the lower entry barriers in crypto investments, making it an appealing option for those who may find property ownership out of reach.
“For many Kiwis, the dream of home ownership is at odds with their current economic reality. At the same time, crypto is entering the mainstream - including institutional investment – and our mission is to leave no one behind. The main goal of our research was to understand the next wave of crypto adopters and what we need to do to support them to make informed and smarter investment decisions.”
By 2025, the number of crypto users in New Zealand is expected to reach nearly 1.94 million. Additionally, the user penetration rate is projected to be 36.68% in 2024, remaining steady into 2025.
Amid this surge in crypto interest, the Reserve Bank of New Zealand has initiated a new consultation phase on the development of a Central Bank Digital Currency (CBDC). The focus is on gathering feedback about potential design features for a digital version of the New Zealand dollar (NZD).
The proposed digital currency would be exchangeable with physical cash, bank deposits, and other financial assets. However, unlike traditional currencies, the Reserve Bank would not issue the CBDC directly to consumers.
Instead, private sector players like banks and payment service providers would manage their distribution and offer related services. The CBDC aims to integrate features like smart contracts, enabling programmable payments and automated transactions.
For instance, a business owner in New Zealand could use a digital account to set up smart contract-based payments. This includes releasing funds only after specific conditions are met, such as the fulfillment of an order.
While the Reserve Bank's consultation process is ongoing, with the current phase concluding on July 26, the full design and cost-benefit analysis (Stage 2) is set to continue until 2026. This indicates that New Zealand is still in the early stages of its CBDC journey.
In the meantime, the country already has several Bitcoin ATMs, such as those operated by Localcoin, serving various locations, making crypto access easier for the public. Additionally, New Zealand charities are allowed to accept cryptocurrency and NFT donations.
Several well-known charities, such as UNICEF New Zealand, Plunket, and HeartKids, have already embraced this option. They use third-party platforms like The Giving Block to facilitate the donation process.
Regulation of Crypto in New Zealand
Source: Freepik
As the popularity of cryptocurrencies continues to grow in New Zealand, regulatory bodies have stepped in to provide oversight and guidelines for this emerging sector. Although cryptocurrencies are not considered legal tender in the country, the businesses and services related to them are regulated under various financial laws.
However, the country has established a regulatory framework to oversee cryptocurrency-related businesses. This includes exchanges, brokers, and Initial Coin Offering (ICO) providers, by treating them as financial services.
This regulation falls under the Financial Markets Authority (FMA) jurisdiction, which requires these businesses to obtain an FMA license to operate. Blockchain technology itself, along with the use of cryptocurrencies and NFTs, is also fully legal in New Zealand.
Although no specific regulatory system is dedicated exclusively to blockchain, several existing frameworks may apply based on the specific use case. For instance:
- Consumer Protection Laws: The Fair Trading Act 1986 and the Consumer Guarantees Act 1993 are in place to protect consumers from misleading practices and ensure fair trading.
- Financial Services Regulations: Crypto businesses must comply with the Financial Service Providers Act 2008 and the Financial Markets Conduct Act 2013. These regulations address the registration, dispute resolution, and conduct standards for financial service providers.
- Anti-Money Laundering (AML) Compliance: The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 sets out requirements for businesses to prevent financial crimes.
- Privacy Protections: The Privacy Act 2020 governs data protection standards, ensuring that businesses, including those dealing with crypto, handle personal information responsibly.
The Department of Internal Affairs (DIA) is responsible for overseeing AML compliance, with added requirements for exchanges under the Financial Advisors Act. ICOs are evaluated individually to identify the appropriate regulatory framework.
Furthermore, businesses offering ICOs that classify their tokens as financial products must register with the Financial Service Providers Register. They must also comply with AML regulations and adhere to fair dealing rules, which prohibit misleading advertising and deceptive practices.
Taxation of Crypto in New Zealand
Source: Freepik
New Zealand's approach to taxing cryptocurrencies is still developing, as there is no dedicated legal framework for crypto tax at the moment. However, the Inland Revenue Department (IRD) has provided some guidance on how crypto assets are treated under the current tax system.
Rather than being classified as currency, crypto assets are considered personal property for tax purposes. For tax purposes, cryptocurrency is subject to Income Tax rather than a specific Capital Gains Tax.
This means profits from trading or disposing of crypto assets are taxed at your marginal income tax rate, which can be as high as 39%, depending on your total annual income.
The Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Act 2022 classifies the trading of crypto assets as a "financial service.” This makes it an exempt supply under the Goods and Services Tax (GST) Act 1985.
The following scenarios are considered taxable disposals of crypto:
- Selling cryptocurrency for New Zealand Dollars (NZD) or any other fiat currency.
- Trading one cryptocurrency for another.
- Spending cryptocurrency on goods or services.
- Gifting cryptocurrency to another person.
- Lending cryptocurrency, particularly if you no longer hold beneficial ownership or receive a token in exchange for representing your loaned asset.
In addition, acquiring crypto can also trigger taxable events. The IRD notes that mining rewards and certain types of airdrops are subject to Income Tax.
As part of ongoing efforts to regulate the crypto-asset industry, the New Zealand Government introduced the Taxation Bill in August 2024. This bill includes significant changes for the crypto industry.
A key provision is the adoption of the OECD’s Crypto-Asset Reporting Framework (CARF). The OECD framework is aimed at increasing transparency in crypto-asset transactions. This is done by requiring service providers to report transaction details to tax authorities.
Starting 1 April 2026, New Zealand-based crypto service providers must collect and report transaction data for users, with the first report due by 30 June 2027. This data will be shared with international tax authorities by 30 September 2027.
These changes will require crypto providers to update their policies, adopt new procedures, and ensure compliance with due diligence and reporting standards.
Factors Driving Crypto Adoption in New Zealand
New Zealand has witnessed a notable increase in interest in cryptocurrencies, driven by various factors that shape the future of crypto adoption and investment in the country.
The country has seen a shift in financial preferences, with more people considering digital assets as an attractive option for future investment.
Here’s a closer look at the key factors fueling this growing interest in crypto investment.
The Desire for Financial Freedom
One of the primary reasons Kiwis are drawn to crypto is its accessibility. For many, investing in real estate or traditional assets requires significant upfront capital, whereas crypto allows incremental investments.
With several platforms now available, people can start with relatively small amounts, making it a more feasible entry point for those with limited resources.
Cryptocurrencies offer a flexible approach to investing, letting individuals manage their portfolios directly, diversify easily, and grow their investments over time.
Dissatisfaction with Traditional Financial Systems
A growing number of Kiwis are dissatisfied with traditional financial institutions, such as banks and even the government. Some see these entities as profit-driven, with little regard for individuals’ financial well-being.
For example, a survey by Protocol Theory and Easy Crypto revealed that 33% of crypto investors in New Zealand are motivated by a desire to bypass banks. They are also looking to minimize the profits that banks and corporations make from traditional financial transactions.
This sentiment highlights the appeal of cryptocurrencies, which operate outside the control of central authorities, offering users more control over their financial futures.
Accessibility and Lower Barriers to Entry
Compared to the real estate market, cryptocurrencies present much lower barriers to entry. The ability to invest small, incremental amounts in crypto assets, as opposed to having to commit large sums of money for property purchases, makes crypto more accessible.
In fact, 60% of New Zealanders in a recent survey indicated they would feel more comfortable investing small amounts in cryptocurrencies. This easy entry, combined with the flexibility to trade and transact as needed, has contributed to the adoption of crypto in the country.
The Promise of High Returns
Cryptocurrencies, especially popular ones like Bitcoin and Ethereum, have shown significant potential for high returns. Despite the volatile nature of the market, many investors see the potential for substantial gains, particularly with the long-term growth of digital assets.
As the value of cryptocurrencies fluctuates, investors may see opportunities for profits through careful buying and selling strategies. The appeal of these high returns has led many to view crypto as a viable investment asset, with the hope that early investment will pay off handsomely in the future.
Rising Institutional Involvement
Institutional investment is another factor contributing to the growth of crypto adoption. Large organizations and investors are increasingly exploring digital assets, driving up the market value and bringing greater mainstream attention to the space.
New Zealand has not been immune to this trend. As larger institutional players begin to make moves in the crypto market, individual investors in New Zealand will feel more confident in participating.
Current Usage of Crypto in New Zealand
Source: Freepik
Cryptocurrency usage in New Zealand has steadily gained traction, with people and businesses exploring various applications beyond investment. These include:
Crypto as a Payment Method
Although not yet widespread, a growing number of New Zealand businesses have begun accepting cryptocurrency as a valid payment option. Companies like Easy Crypto make it easier for Kiwis to buy, sell, and exchange cryptocurrencies.
Some New Zealand businesses, such as Irepair and Freshstore, accept Bitcoin. This reflects an increasing willingness to integrate crypto into everyday commerce.
These payment options give consumers flexibility and encourage the practical use of cryptocurrencies for goods and services.
Investment Diversification
Investment in cryptocurrency remains one of the most common uses in New Zealand. More New Zealanders are diversifying their investment portfolios by including cryptocurrencies like Bitcoin and Ethereum.
According to a survey by Finder, over 9% of New Zealanders currently own some form of cryptocurrency, with Bitcoin being the most popular choice. Digital currencies have gained a reputation as high-risk, high-reward assets, making them appealing to younger investors.
NFTs and Digital Art
Non-fungible tokens (NFTs), a unique form of crypto asset, have gained popularity in New Zealand’s creative sector. Digital artists and musicians are beginning to explore NFTs as a way to sell artwork and music directly to fans, cutting out intermediaries.
NFTs also offer artists a new revenue stream through royalties on secondary sales, a feature that traditional art markets cannot provide.
Examples of NFT use in New Zealand include the Rhythm and Vines music festival, which utilizes collectible NFTs to provide verified access to exclusive event experiences. Another example is Voxel, an early metaverse platform pioneering virtual worlds in the region.
Charitable Donations and Crowdfunding
Cryptocurrencies are also becoming a popular way for New Zealanders to contribute to charitable causes. The transparency and traceability of blockchain transactions make crypto donations an appealing option for both donors and organizations.
For instance, charities like UNICEF New Zealand and Whānau Āwhina Plunket accept Bitcoin and Ethereum donations. This allows for greater flexibility in how people choose to give.
Challenges to Crypto Adoption in New Zealand
Source: Freepik
Despite the growing interest in cryptocurrencies, several factors hinder widespread adoption in New Zealand.
The challenges range from a lack of understanding and educational resources to regulatory uncertainties and concerns about security. They include:
Regulatory Uncertainty and Concerns
A significant barrier to crypto adoption in New Zealand is the general public's limited understanding of digital assets. While some guidelines exist, the government has yet to establish a comprehensive regulatory framework.
This makes it difficult for new investors and companies to understand their obligations or rights. Without clear regulations, potential investors worry about the risks associated with crypto investments.
This lack of regulatory clarity impacts both individuals and businesses by creating a sense of unpredictability. According to a survey conducted by the FMA, about 50% of respondents expressed support for regulations that would govern how crypto providers conduct themselves.
Lack of Education And Accessibility
Another major challenge is a lack of knowledge and accessibility. Cryptocurrency and blockchain technology are often seen as complex and challenging to understand.
This is a barrier for many potential investors who are unsure where to start. Additionally, these potential investors do not know how to make informed decisions or even what terminology like “blockchain” and “DeFi” means.
The same FMA survey found that 72% of respondents who haven’t invested in crypto attribute their hesitance to a lack of understanding. This emphasizes the need for better educational resources.
Efforts to bridge the knowledge gap are growing, with some local organizations like BlockchainNZ hosting events to explain the fundamentals of blockchain technology. However, these educational initiatives often don’t reach the average person.
"To close the gap between recognizing crypto as a future financial solution and taking action, we need to simplify the investment process and make it more accessible. This includes offering stablecoins that provide a stable entry into the digital marketplace and user-friendly wallets tailored for beginners."
Security Risks and Scams
Cryptocurrencies have been linked to a number of security concerns, including fraud, hacking, and scams. Unfortunately, New Zealand is not immune to these issues.
Several scams have led to significant financial losses in New Zealand and globally.
The risks involved in digital asset ownership may deter potential users who feel unsure of their ability to protect their assets in such an environment.
“It is distressing for anyone who falls victim to a scam. The Government is always looking at ways to help Kiwis protect themselves online.”
The best way for people to protect themselves is to be vigilant and “aware of the risks”.
Market Volatility and Lack of Trust
The volatility of cryptocurrencies is a well-known deterrent to broader adoption. Unlike traditional assets, crypto prices can swing wildly within a short period, creating a challenging environment for investors seeking stable returns.
This price unpredictability is intimidating for new investors and may deter individuals who seek less risky, more predictable investments.
In addition, the absence of an institutional safety net or protections can make investors wary.
Conclusion
Crypto adoption in New Zealand is on an upward trend, with increasing interest from individuals, investors, and businesses alike. Despite its growing popularity, several barriers continue to slow down widespread acceptance.
Challenges like regulatory uncertainty and a lack of clear educational resources make it difficult for many New Zealanders to feel confident about investing in or using crypto. To foster acceptance, there needs to be a concerted effort to address these barriers.
Clear regulatory guidelines will provide a safer and more predictable environment for investors. If these recommendations are implemented, New Zealand has the potential to become a leader in the crypto space.
