Risk Statement

Last Updated: 28 November, 2022

Savings - Bonds and Digital Assets Risk Statement 

Aera 22 Opco Limited (“Aera”) offers a platform that lets users earn a return in exchange for placing funds in unique savings accounts. These savings accounts hold assets that represent risks greater than holding funds in traditional bank accounts. 

Aera is registered on the Financial Services Providers Register (FSP1003388). This does not mean that Aera is licensed by a New Zealand regulatory authority at this time. 

Aera offers two asset classes that a user can hold for the purpose of generating a return. 

  1. A portfolio of Digital Assets 
  2. An order of Corporate Bonds 

The Risk of holding each of these asset classes is different. This statement sets out additional information for users of the platform to consider and is to be read in conjunction with our Terms here. By accessing and using the platform you agree that you have read these risks, understand your risk appetite and personal situation and agree that the platform is suitable for you. Key risks for each asset class are outlined below: 

Remember 

  1. Aera does not provide a regulated financial product for the purposes of the FMCA. 
  2. Returns on your savings are not always guaranteed. Aera will provide you with a published savings rate which is reviewed regularly. The current savings rate on your account will be published at https://www.aera.nz/rates but Aera may increase or decrease rates without notice to you. 
  3. Like any form of investment, there is a chance that you may lose some or all of your savings. Although the asset classes available on the platform are publicly available assets, there are circumstances that may occur which could impact the realisation of either principal or interest. Some, but not all, risks of using the platform are set out below. 
  4. Any information on the platform does not constitute financial advice for the purposes of the FMCA. We are not aware of your personal situation and do not make any assessment of suitability for you to use the platform. If you are unsure about suitability you must consult your own professional advisors and make your own assessment before use. 
  5. The Aera platform is intended for users within New Zealand. Aera makes no warranties that it will be freely available in any jurisdiction or satisfies the laws of all countries.

A portfolio of Digital Assets 

Digital assets primarily comprise a mix of stablecoins that are managed by Aera for the purpose of maximising return as custodian of customer funds. These are not financial assets for the purpose of the Financial Markets Conduct Act 2013 (“FMCA”). 

Stablecoin risk: When you hold digital assets on the platform, Aera will primarily use stablecoins to provide a return to you. Stablecoins are intended to hold their values closely to the fiat equivalent currency and normally fall into two categories of how this is achieved, algorithmic or fiat-backed. Either category may be used. There is no guarantee however any stablecoin value will hold at the intended level. 

Foreign exchange risk: When you hold digital assets on the platform, Aera may acquire foreign currency-backed stablecoins for use in liquidity pools or to generate return. These stablecoins values are subject to the same volatility as if purchasing the underlying currency. 

Platform and Contract risk: Digital assets are used on third party platforms to trade, stake or provide liquidity and generate a return. These third party platforms are subject to cyber risks which may include technical errors, hacks and system failures. These may impact the ability to liquidate particular digital assets entirely or the redemption value of the digital assets. 

There is a chance that all your digital assets may be unrecoverable due to a hack or malicious actor. 

Digital Asset value risk: Although stablecoins are intended to reflect the underlying pegged fiat currency, there is a risk that the stablecoin value deviates from the underlying intended value. There may also be exposure to non-stablecoin digital assets to generate a yield, such as where a yield platform pays returns in a non-stablecoin token. Non-stablecoin digital asset prices are volatile and will fluctuate widely based on market conditions. 

An order of Corporate Bonds 

An order of Corporate Bonds grants the customer fractional ownership of a fixed basket of bonds that is disclosed at the commencement of opening the savings account. The underlying allocation of these assets does not change while the savings product is open, however a user may increase or decrease their allocation. 

Bonds are subject to price volatility, generally categorised as interest rate, tenor and counterparty risks. These are explained below: 

Interest rate risk: A bond generally will have a coupon value attached, which provides a cash payment to the bond-holders of a fixed percentage amount of the bond’s face value (a coupon rate). In times of interest rate volatility, this coupon rate can be seen as more or less attractive to the market. This attractiveness will impact the liquidation price of the bond. 

Tenor: Each bond has an expiry date, at which point the principal amount will be paid back to the bond holders in accordance with their position. The time to maturity may influence the market’s view of the underlying bond price.

Counterparty risk: A bond is a liability that is borne by a commercial entity. When purchasing bonds, you are a creditor of the commercial entity and subject to risks of the entity being unable to pay either the coupon, or principal amount in accordance with the bond. 

Bond prices are subject to market fluctuations. When a member holds an interest in corporate bonds, Aera will guarantee the return of the principal amount, as well as the published return to the member. The return is accrued daily and paid monthly. 

Risks associated with all savings products. 

Platform risk: Your access to the platform, or specific products, may be impacted by system outages or technical errors. We will make reasonable efforts to update members via our email, website or social channels if there is an outage or technical issue that may impact quality of service. 

Liquidity risk: Investments generally are subject to supply and demand fluctuations, and in order to realise the value of an asset there must be a liquid marketplace of buyers and sellers. Liquidity may also delay the withdrawal of assets back to NZD. 

Cyber security risk: Interacting and transmitting data on the internet, particularly in investments, carries risk. Platforms are often targets for bad actors and malicious behaviour that may impact your investment. Bad actors may target you with phishing emails or other communications which are intended to steal or exploit in some way. If you are suspicious that there may have been a breach of any kind relating to your account (exploit, phishing, ransomware, malware) stop transacting and contact us by our website or mobile app. 

Regulatory risk: Aera does not offer regulated services or products for the purposes of the FMCA, therefore the investor protections that apply to regulated services do not apply. General consumer protections, such as fair dealing or representation do however apply. Users are responsible to ensure that their use of the platform is compliant with any applicable laws in their jurisdictions. New or changing regulations may impact the platform, the ability for you to use or withdraw from the platform, or the returns that you may receive by using the platform. 

Tax treatment: We make no representation on the tax treatment of our products and your own personal situation. Accordingly, you are responsible for understanding your tax position, potential liability and the tax implications of using the platform. 

Unforeseeable risks: As with any savings or investment product, there is risk associated with the volatility of financial markets, economies, and savings or investment conditions. There will be unforeseen events that may impact the value of an underlying asset, or even the ability to realise the value. Alternative investments are particularly subject to fast paced change which heightens risk across the other categories mentioned above. 

Delays: There may be times where the withdrawal or deposit of assets (to or from NZD) are delayed for reasons that may or may not be listed here. Aera will advise a targeted withdrawal or deposit timeframe but are not responsible for any loss of value that arises due to a delay. Transactions on the platform are unable to be cancelled once the instruction is received which may mean that assets are unavailable for a period of time while an action is pending completion. 

Some things to remember:

Always make sure you access your account via the mobile application or Aera’s website at https://www.aera.nz

We will never ask for your password via email, and if in doubt please use the website or mobile app to communicate with us.