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  4. 3 things to know if you’re planning to buy cryptocurrencies

3 things to know if you’re planning to buy cryptocurrencies

1. They are high risk and highly volatile

There are lots of cryptocurrencies available. If one becomes popular its value may increase quickly, but its value can also suddenly drop, sometimes permanently. Only invest money you can afford to lose.

This volatility risk increases if you invest in the futures market through contracts for differences (CFDs) where you make (or lose) money by predicting how the price of cryptocurrencies might change. These products are typically offered with leverage so you may only pay a portion of the value of your trade upfront but if you lose, you will need to repay the full amount borrowed, plus any amount you’ve lost. Even small movements in currency values can have a big impact on any gains or losses you make. 

2. They are not regulated in New Zealand

Many cryptocurrency exchanges are unregulated and operate exclusively online – with no connection to New Zealand. This makes it unlikely you’ll recover your money if things do go wrong. It also makes it hard to find out who is offering, exchanging, buying or selling the cryptocurrencies.

  • Make sure any New Zealand exchange you use:
  • Know what you’re getting into, including how the currency is stored and transferred, and how to get your money back
  • Understand how to access a payment record. You may need to prove you’ve made a payment to get a refund.    

3. You may become a target of online fraud and scams

Once you’ve bought cryptocurrencies you’re more likely to be a target of online fraud and scams.

Before you invest, understand the common warning signs of a scam and the steps you can take to protect yourself.

Learn more about cryptocurrencies