The Financial Markets Authority (FMA) has published a commentary on initial coin offers (ICOs) and cryptocurrency services, alongside online resources for investors.
The FMA said it wanted to facilitate responsible innovation, and ensure that the regulatory regime remain relevant and agile. The FMA said this was supported by the Financial Markets Conduct Act 2013, that sets out one of its principle purposes is to “promote innovation and flexibility in financial markets”.
The FMA said it regularly engages with other regulators and industry bodies (both locally and internationally) on innovation and market flexibility. The FMA said its work in this area was part of an “ongoing effort to better understand, and share our views, on the risks and opportunities associated with technological change and innovation.
FMA said investors must understand the risks involved with cryptocurrencies and associated services before they invest.
“Most online exchanges are unregulated and operate exclusively online, with no connection to New Zealand. This means it is hard to find out who is offering, exchanging, buying or selling. It also makes it unlikely investors will recover their money if things go wrong. Using cryptocurrencies may make investors a target for scammers.
“Consumers need to be aware that cryptocurrencies are volatiles, their value can change quickly and they aren’t widely accepted in the same way as legal tender. The currency held in digital wallets is at risk of being stolen, just like a real wallet.”
| An NZ|Advisor release || October 26, 2017 |||