It’s no secret that Bitcoin’s sudden rise to $42,000 piqued interest from retail investors and crypto amateurs. However, the short-lived high was soon washed over when the digital asset slumped therefore costing the sector billions.
As a result, New Zealand’s financial watchdog Financial Markets Authority (FMA) published a warning against investment risks in cryptocurrency promising high returns. It said that crypto trading is highly unregulated Down Under. As published in a report by the NZ Herald, the regulatory body added that Bitcoin’s volatile nature involves a slew of risks which many are unaware of.
“Cryptocurrencies are not regulated in New Zealand and are often exploited by scammers and hackers. New Zealanders considering purchasing cryptocurrencies, such as Bitcoin, should be aware that these are high risk and highly volatile assets,” an FMA spokesman told the NZ Herald.
Indeed, in August 2020, scammers used NZ Prime Minister Jacinda Ardern’s image to trick Kiwis to invest into questionable cryptocurrency deals.
Being advertised on social media including Facebook through the company called ‘Profit Bitcoin’, the scheme linked to a fake “special report” which also used One News’ logo.
This announcement comes a day after the UK’s Financial Conduct Authority (FCA) too issued a similar warning against investment in cryptocurrency assets.
“The FMA shares the FCA’s concerns that some crypto exchanges are promising high returns and customers should be prepared to lose all of their money. Many overseas cryptocurrency exchanges are unregulated and operate exclusively online, with no connection to New Zealand. This makes it hard to find out who is offering, exchanging, buying, or selling the cryptocurrencies,” the report continued.
Despite the warning, if one still chooses to buy cryptocurrency, the exchange must be registered on the Financial Service Providers Register (FSPR), therefore giving the user “access to a dispute resolution scheme,” the FMA spokesman said. “You should also check if the exchange holds your New Zealand dollars in a trust account.”