Trustees Executors chief, Ryan Bessemer, has warned Kiwi investors off excess cryptocurrency consumption as celebrity-endorsed pump-and-dump schemes proliferate.
In a release, Bessemer singled out the ill-fated SafeMoon crypto experiment promoted by alleged “A-list celebrities, including Nick Carter, Soulja Boy and YouTubers Jake Paul and Ben Phillips”.
“SafeMoon tokens were first sold in 2021 and increased in price by over 21,000% within one month. However, token holders lost hundreds of millions of dollars after it was revealed SafeMoon’s founders had falsely stated their transaction fees would be locked away in a liquidity pool for several years,” Bessemer said.
“The price of SafeMoon tokens dropped by more than 70% after a blog post revealed that the liquidity pools were not locked.”
Included in the third ‘Money and you’ report published by the Financial Services Council (FSC) last week, Bessemer said the SafeMoon crash-landing, among a spate of other accidents in the space, highlighted the need for greater regulation of crypto assets to ban practices that were “outlawed in stock markets years ago”.
“Of course, regulation cannot and should not be the only response to this type of behaviour. It is incumbent on us as an industry and a community to communicate the value of quality and qualified advice, and at TE we look forward to playing our part,” he says in the report.
The proportion of New Zealanders either investing in or considering an allocation to crypto has dropped to 17 per cent from about 30 per cent in the previous survey in 2021, the FSC report says, while about 70 per cent of the 2,000 or so respondents viewed the sector as risky.
But a similar consumer survey released by the Australian Securities and Investments Commission (ASIC) last week found investors across the Tasman are more relaxed about crypto-risks, sparking calls for tighter regulation.
More than 40 per cent of those surveyed by ASIC report some crypto-exposure, making it the second-largest Australian retail investor holding after shares: about 25 per cent of respondents said they invested only in cryptocurrencies.
Joe Longo, ASIC chair, said the survey results flagged the need for new regulatory powers in the sector.
“We are concerned about the number of people surveyed who reported investing in unregulated, volatile crypto-asset products. This research does highlight during this particular point in time, the appeal of crypto-assets to the market. According to the survey, only 20% of cryptocurrency owners considered their investment approach to be ‘risk-taking’, raising concerns that investors did not understand the risks of this asset class,” Longo said in a statement.
“ASIC is also concerned that there are limited protections for crypto-asset investments given they have become increasingly mainstream and are heavily advertised and promoted. There is a strong case for regulation of crypto-assets to better protect investors.”
Meanwhile, the FSC survey found NZ investors have remained relatively calm despite the ongoing market volatility that erupted near the end of last year.
The most recent poll of 2,000 New Zealanders, carried out by Australian researcher CoreData, was conducted in January this year.
“Respondents indicated KiwiSaver, cash (including term deposits) and New Zealand shares as the most popular investment types. Compared to 2021, around 13% more are invested in KiwiSaver and less in cash,” the FSC study says. “There is also a drop in the number of respondents investing in cryptocurrencies than in previous years. Around 20% said they have no investments.”
The report confirms a growing interest in investment among Kiwis with more than 30 per cent either using self-directed platforms or planning to do so.
According to the FSC report, most New Zealanders “are going online to manage finances, with 88% of respondents currently using or have used online digital finance tools for banking, insurance and KiwiSaver”.