New Zealand's financial regulator, the Financial Markets Authority (FMA), issued a warning to local cryptocurrency investors and traders following Bitcoin's latest price plunge. The FMA urged caution, labeling cryptocurrencies as “high risk and highly volatile assets.”
FMA Flags Volatility Risks
According to an official statement published in the NZ Herald, the FMA expressed concern over Bitcoin's recent “rollercoaster move.” An FMA spokesperson stated: “Cryptocurrencies are not regulated in New Zealand and are often exploited by scammers and hackers.” The regulator also quoted the UK's Financial Conduct Authority (FCA), noting: “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.”
Beware of Unregulated Overseas Exchanges
The warning specifically targeted unregulated overseas exchanges. The spokesperson said such entities make it “hard to find out who is offering, exchanging, buying or selling” cryptocurrencies. The FMA advised investors to check whether an exchange holds New Zealand dollars in a trust account and verify if it is registered on the Financial Service Providers Register (FSPR), a prerequisite for accessing dispute resolution schemes.
Lessons from Cryptopia: No Deposit Guarantee
The NZ Herald article referenced the 2019 hack of Christchurch-based exchange Cryptopia, which lost an estimated 9.5% of its total holdings. The article emphasized that “crypto deposits are not guaranteed,” underscoring the risks of investing without robust regulatory frameworks.
This latest FMA warning serves as a stark reminder for investors to remain cautious amid crypto market volatility, avoid chasing high returns on offshore platforms, and verify exchange registration.