The Financial Markets Authority has issued an emphatically-spoken warning for the Kiwi to consider taking over cryptocurrency.
The watchdog provided his comments to the Herald following Bitcoin’s latest rollercoaster move – the digital currency’s value has fallen by about a third since Friday after doubling over the past month – and similar advice issued by its UK counterpart, the Financial Conduct Authority or FCA.
“New Zealanders considering buying cryptocurrencies, such as Bitcoin, should be aware that this is a high-risk and highly volatile asset,” said an FMA spokesman.
“Cryptocurrency is not regulated in New Zealand and is often exploited by scammers and hackers.
“FMA shares FCA’s concern that some crypto exchanges promise high returns and customers must be prepared to lose all their money.
“Many foreign cryptocurrency exchanges are not regulated and operate exclusively online – without a connection to New Zealand. This makes it difficult to know who is offering, exchanging, buying or selling cryptocurrency”
If you are planning to buy cryptocurrency, you should at least ensure that the exchange is listed on the List of Financial Service Providers (FSPR), which gives you access to dispute resolution schemes, said an FMA spokesman.
“You should also check if the exchange keeps your New Zealand dollars in a trust account.”
While much of the narrative around Bitcoin has focused on the rollercoaster valuation of cryptocurrency, people buying any digital currency need to be aware of practical issues too, such as how easy it is to convert to fiat currency.
The $ 30 million Cryptopia theft, which involved a Christchurch-based cryptocurrency exchange operating globally, also highlighted that crypto deposits are not guaranteed – unlike most traditional currencies, where governments would normally step in either by law or political pressure if there was a big loss.
The liquidator from Grant Thornton, and the police, is still around try to parse what happened to the Cryptopia hack, which happened in January 2019.
3 things you need to know about cryptocurrencies like Bitcoin
• They are high risk and very volatile – prices can go up and down very quickly
• They are not regulated in New Zealand
Cryptocurrencies, crypto-exchanges, and the people who use them are often targets for hacks, online scams and scams
Source / FMA