New Zealand’s financial watchdog sounded a warning whistle to cryptocurrency investors after bitcoin’s latest price drop.
According to a report on Tuesday by the NZ Herald, the Financial Markets Authority (FMA) said New Zealanders who were considering purchasing cryptocurrencies need to be aware they are “high risk and highly volatile” assets.
“Cryptocurrencies are not regulated in New Zealand and are often exploited by scammers and hackers,” an FMA spokesperson told the Herald.
The warning comes a day after the regulator’s U.K. counterpart, the Financial Conduct Authority (FCA), also raised similar concerns. The FCA said people should be prepared to lose “all their money” if they choose to invest in crypto products promising high yields.
“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,” said the spokesperson.
Overseas cryptocurrency exchanges are “unregulated” and operate solely online, making it harder to track the operators, the watchdog cautioned. Users should check if an exchange holds New Zealand dollars in a trust account, they said.
Beginning Dec. 1, the price of bitcoin rose 124% from around $18,770 to record highs near $42,000 on Friday. The world’s largest cryptocurrency by market capitalization has dropped 18% since Sunday and is currently changing hands for around $35,150.