- The Financial Markets Authority has given an emphatic admonition for Kiwis thinking about taking a punt on digital money
- The monitoring institution offered its remarks to the Herald following Bitcoin’s most recent two-day plunge following a streak of excessive profits
- A comparable warning has also been given by its equivalent watchdog in the UK, the Financial Conduct Authority or FCA
The regulating body of New Zealand has issued a severe warning to crypto traders about the high risks posed by the virtual currency.
Get Set to Suffer Massive Loss of Digital Assets
In a recently released warning, New Zealand’s apex financial regulation body, the FMA (Financial Markets Authority) highlighted the volatility presented by digital currency along with subsequent losses that traders may face. This comes in the wake of Bitcoin’s (BTC) deteriorating value in the market immediately after the top cryptocurrency provided record-breaking profits in the stock exchange.
The authority also forewarned users about the probable scams and hacking operations that could take place due to the deregulation of cryptocurrencies in the country. This concern is mirrored by the Financial Conduct Authority (FCA) of the U.K., with apprehensions towards the high-risk high return quality of such digital assets.
The numerous digital currency trades based abroad are supposedly unregulated and work only on the web – with no association to New Zealand. This makes the process elusive, with no legitimate information about who is offering, trading, purchasing or selling the digital currencies.
Background Checks Necessary Before Making Investments
The FMA suggests verifying the identity of any exchange-based website that offers high returns on cryptocurrency investments before taking part in any transactions related to digital assets. It also reiterates the importance of ensuring that the company providing such trade services is registered with the Financial Service Providers Register (FSPR), a branch of the FMA instituted for the supervision of trade activities in New Zealand. This is essential because of the access to conflict resolving schemes provided by the FSPR. A check related to the exchange regarding holding of NZ dollars in a trust account has also been proposed to users for security and protection against any fraudulent activities.
Despite a lot of the narrative around Bitcoin being fixated on the cryptocurrency’s fluctuating valuation, users who purchase any digital currency need to be apprised of pragmatic problems that may arise, such as how easy it is to convert crypto to a fiat currency.
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