- The SEC is recommending investors exercise caution with crypto asset securities.
- The warning comes amid the U.S. National Financial Capability Month.
- The financial watchdog suggests that crypto investments may go against federal securities laws.
The U.S. Securities and Exchange Commission (SEC) is urging American investors to err on the side of caution when dealing with crypto-related investment products. The circular is part of the financial watchdog’s effort to highlight free investor education resources during National Financial Capability Month.
According to the press release from the SEC, the Commission’s Office of Investor Education and Advocacy (OIEA) has chosen “Investing for everyone” as the theme for April’s National Financial Capability Month. As part of the theme, the Commission’s staff and leadership will promote free tools and resources for investors in the country.
The tools and resources include guide videos, quizzes, articles, and, most notably, an investor alert that urged investors to exercise caution with “crypto asset securities.” In the alert, the SEC suggested that entities offering crypto asset investments or services “may not be complying with applicable law, including federal securities laws.”
The financial watchdog also highlighted the risks associated with crypto and digital asset investments, including volatility, unpredictability, and illiquidity. The SEC pointed out the risk of bankruptcies, citing the turmoil in the crypto industry over the past few months.
“Crypto asset securities-related investments continue to be replete with fraud, including bogus coin offerings, Ponzi and pyramid schemes, and outright theft where the project promoter simply disappears with investors’ money,” the investor alert read.
The SEC’s alert repeatedly mentioned “crypto asset securities,” reinforcing the regulator’s attempt to bring crypto assets under its jurisdiction by labeling them “securities.” The financial regulator recommended investors only put money into crypto that they could afford to lose entirely.
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