The Financial Markets Authority (FMA) has warned New Zealanders about the risk of investing in cryptocurrencies, their high volatility, and the lack of industry regulation in the region.
The FMA said that New Zealanders who have considered buying cryptocurrencies should be aware that these are “high risk and highly volatile” assets.
“Cryptocurrencies are not regulated in New Zealand and are often used by scammers and hackers,” said an FMA spokesman.
Earlier this week, the UK Financial Conduct Authority (FCA) posted a similar warning on its website. The regulator said consumers must be prepared to lose “all their money” if they decide to invest in cryptocurrency products that promise high returns.
“The FMA shares FCA’s concerns that some cryptocurrency exchanges are promising high returns and customers must be prepared to lose all their money,” added an FMA spokesman. “Many overseas cryptocurrency exchanges are not regulated, operate exclusively online, and have nothing to do with New Zealand. This makes it difficult to determine who offers, exchanges, buys or sells cryptocurrencies. ”
According to an FMA spokesperson, if an investor plans to buy cryptocurrency, they must at least ensure that the exchange is registered with the Financial Service Providers Registry (FSPR), which gives access to a dispute resolution scheme.
“You should also check if the exchange holds your New Zealand dollars in a trust account,” he added.
