Choosing a crypto wallet in New Zealand

Every serious argument about wallets reduces to one question: who holds the keys. If a company holds them, you own a promise. If you hold them, you own the asset and you also own every consequence of losing them. New Zealanders have watched Cryptopia lose customer funds to a hack in 2019 and Dasset go into liquidation in 2023 with roughly NZ$6.3 million unaccounted for. Both were arguments for the second option.

Custodial versus self-custody, in plain terms

When you buy on an exchange and leave the coins there, the exchange holds the keys. That is custodial. It is convenient — you can trade instantly, recover a forgotten password, and ring someone if you get stuck. It also means your holding is an entry in a company's database, and if that company fails you join the unsecured creditors.

Self-custody means you hold a recovery phrase, usually twelve or twenty-four words, from which every key in your wallet is derived. Nobody can freeze your funds, nobody can lose them on your behalf, and nobody can help you if you lose the phrase. It shifts the risk from institutional failure to personal error, which is a genuinely better trade for most people but not a costless one.

The distinction mattered enormously during the Easy Crypto wind-down. Because the Easy Crypto Wallet was self-custodial, the company could not move user funds even as it shut the platform down — which is exactly why users still had them. Customers had to migrate manually, which was annoying. Annoying is a far better outcome than being a creditor in a liquidation.

Hot, cold and the sensible split

A hot wallet is connected to the internet: a phone app, a desktop program, a browser extension. It is fast and convenient and it lives on a device that could be compromised. A cold wallet is a dedicated hardware device that signs transactions internally, so the private key never touches your computer even when you plug it in.

Almost nobody needs only one. The pattern that works is a small hot wallet for spending and experimenting, and a hardware wallet for anything you would be genuinely upset to lose. The threshold at which a hardware wallet becomes worth buying is roughly the point where the holding exceeds the price of the device several times over — for most New Zealanders that is somewhere around NZ$1,000 to NZ$2,000.

Prices are indicative in New Zealand dollars including typical shipping, and move with exchange rates. Always buy hardware from the manufacturer or a named authorised reseller.

The recovery phrase is the whole game

Everything else about wallet security is detail. The recovery phrase reconstructs your entire wallet on any compatible device, anywhere, forever. Whoever has it has the coins. This leads to three rules that sound paranoid until you meet someone who broke one.

Write it on paper or stamp it into metal. Do not photograph it, do not put it in a notes app, do not email it to yourself, and do not store it in a password manager that syncs to a cloud you do not control. Every one of those creates a digital copy that malware can find.

Store it somewhere that survives the thing you are actually worried about. In New Zealand that realistically means fire and earthquake, not international espionage. A metal backup in a home safe plus a second copy at a trusted family member's house is more robust than a single sheet of paper in a drawer.

And never type it into anything. No legitimate wallet, exchange, support agent or "validation tool" will ever ask for your recovery phrase. The moment a website, a chat message or a person asks you to enter those words, the interaction is a theft in progress.

Buying hardware safely from New Zealand

Order directly from the manufacturer's website and let it ship here, or use a reseller the manufacturer explicitly names. The reason is specific: pre-tampered devices sold through marketplaces and auction sites are a known attack, where the seller has already generated the recovery phrase and simply waits for you to fund the wallet.

When the device arrives, it must generate a fresh recovery phrase in front of you during setup. If a device arrives with a phrase already written on a card, or with instructions to enter a phrase supplied in the box, it is compromised. Destroy it and start again with one bought direct. Our hardware wallet guide covers the full setup sequence.

Wallets and your tax records

Moving crypto between wallets you own is not a disposal and does not create taxable income. It does create a record-keeping obligation, because you need to be able to show that a transfer out of an exchange was an internal movement rather than a sale. Save the transaction identifiers along with the dates.

This matters more since 1 April 2026, when New Zealand's adoption of the OECD Crypto-Asset Reporting Framework took effect and service providers began collecting and reporting user transaction data to Inland Revenue. A withdrawal from an exchange to an address the IRD cannot attribute is exactly the sort of thing that generates questions, and the answer is much easier if you kept the records at the time. See our filing guide.

A workable setup for most people

1. Decide the split. A spending balance you can afford to lose, and a savings balance you cannot.
2. Install one reputable software wallet for the spending balance, downloaded from the official site only.
3. Buy one hardware wallet direct once savings exceed a few thousand dollars.
4. Back the phrase up twice, in two physical locations, on paper or metal.
5. Test recovery before funding. Wipe the device and restore from the phrase, so you know it works.
6. Send a small test transaction before moving the full balance.

That takes an afternoon and removes most of the ways New Zealanders lose crypto. The remaining risk is scams, and the defence there is a habit rather than a device — read our scam patterns page before you need it.