High risk
Crypto is generally considered a high-risk investment.
High-risk investments carry potential for higher returns, but they also carry higher potential for loss. They’re not suitable for everyone, especially if you’re uncomfortable with the potential of losing some or all of your investment.
Some things to consider include:
high volatility
lack of regulation
technology risk
tax obligations.
High volatility and market risk
Crypto prices can experience high volatility, which means they can rapidly move up and down (even to zero) in a short space of time—typically much more than prices for shares. You may not make any money and you could get back less money than you put in, or no money.
Cryptoassets might change in value (or even cease to exist or be delisted on a trading venue) for lots of reasons,including:
market sentiment
changes in regulation
global events
other political, economic, tax, legal or technology reasons.
Changes might impact a specific digital asset, exchange, or sector or be wide reaching.
Lack of regulation
Most cryptocurrencies aren’t regulated as financial products in New Zealand—which means they’re not subject to the same legal and regulatory regimes or protections that apply to buying, selling and holding financial products (such as shares).
Cryptoassets are not legal tender and are not backed by any government.
Laws and regulations relating to crypto could change at any time and affect your investment.
Technology risks
Crypto and related technologies (including blockchains and smart contracts) are new and evolving.
Advances in code cracking, or technical advances such as the development of quantum computing, may present risks to cryptoassets, and could result in the theft or loss of your cryptoassets. Other risks include:
attacks by hackers
scams
technical failures
availability issues.
These risks could mean you lose some or all your crypto, or are delayed in being able to buy or sell coins.
We won’t be responsible for any losses related to these risks, or any other failure of our service providers.
Tax obligations
Fees and taxes apply. Local and overseas taxes and legal requirements may impact the overall return on your cryptoassets.
Profits you make from selling crypto may be considered taxable income (unlike profits on sales of shares for example, which may not be).
Unlike tax on shares, we don’t withhold or manage crypto-related income tax on your behalf. You’ll be responsible for reporting taxable income to Inland Revenue and paying any tax obligation at the end of the tax year. Sharesies will provide you with a transaction report with some information that may help you.
You may wish to set aside some of the proceeds of a crypto sale to pay any applicable tax.
Other risks
In addition to the risks included here, the Crypto Terms and Conditions include other risks you need to be aware of, including:
currency exchange risk
liquidity risk
counterparty risk
concentration risk (if your portfolio has limited exposure across cryptoassets and/ or is concentrated on a few cryptoassets)
cryptoassets may be subject to on-chain events such as chain splits or soft/hard forks
pricing information for cryptoassets may be less reliable than the price of a share listed on a single exchange
Sharesies cannot and does not guarantee the value of cryptoassets. Past performance of a cryptoasset is not a guarantee of future performance - we don't have any responsibility for the performance of your cryptoassets.
There may also be other risks associated with cryptoassets, including those that we cannot currently anticipate.
Summary
Before investing in crypto, consider your financial goals, risk appetite, investment timeframe, and overall portfolio.
You should also consider seeking independent legal, financial, taxation, or other professional advice before you decide to invest in cryptoassets (we don’t give financial, legal, tax, or technology advice or recommendations).
Learn more
Sharesies Crypto is offered by Sharesies Crypto Limited.