New Zealanders should never ever invest in any cryptocurrency, a warning from the government’s financial watchdog.
The Financial Services Authority says it wants to put in place a new code of conduct for cryptocurrency investors.
The new code requires investors to keep their investments safe and to act as a “trust” for the currency, it said in a statement.
“The FSA is concerned by the proliferation of new, unregulated digital currencies and their potential for misuse, theft, fraud and other risks, including the possibility that new cryptocurrencies could be used for money laundering, money laundering or other illegal activities,” the FSA said.
“We would like to see the FSF and other financial regulators address the issues raised by digital currencies.
These concerns include, but are not limited to, the risks of introducing a new digital currency into the financial system and whether there is sufficient regulation and oversight to prevent such a phenomenon from happening again.”
The FSF said it has received several inquiries from people in the cryptocurrency industry about potential scams, scams involving virtual currencies and people using the digital currency to make purchases.FSA chief executive David Tew said: “We have seen a dramatic increase in the number of cryptocurrency transactions recently, particularly over the past few months.
This has led to a significant amount of speculation, as well as a surge in digital currency activity, which is highly risky.”
Bitcoin is the most widely traded cryptocurrency on the internet, and has an outstanding market capitalisation of $10.8bn.
“People often invest in digital currencies to make quick and easy purchases, but they can also be used to launder money, buy drugs and evade tax.”
It is therefore imperative that the FSS has the appropriate tools to protect the safety and integrity of financial instruments and that it has the capability to enforce appropriate legislation and regulation to ensure the continued safety and security of financial services.
“The Australian Securities and Investments Commission said it is working to establish standards for digital currencies that will help ensure they are treated fairly and that they are not abused by fraudsters.