People Should Educate Themselves Before Investing in Crypto – NASAA Notes
The North American Securities Administrators Association (NASAA) noted that as attractive as they may seem, cryptocurrencies pose risks to investors and consumers.
Enforcement Section Committee co-chair Joseph P. Borg, Alabama Securities Commission director, noted that the stories of people who invested their savings in different cryptos and became rich are generally tales and these tales attracted a lot of novice investors into believing that they can repeat the same scenario.
While such stories indeed exist, it is necessary to point out that people who invest more are likely to lose more. These people generally do not make announcements, Borg noted.
In an annual survey, NASAA advised people to always remain vigilant and take into account the high volatility of crypto and other digital assets.
This has become extremely important during a period when Bitcoin experienced a painful setback sending warning signs to crypto bulls.
Borg also mentioned crypto scams, which are often seen as investment options and it is necessary for people to understand with whom they are investing their money. In simple words, Borg said that people need to understand that before any type of investment it is vital to educate yourself on different crypto and digital projects. In such a way protecting from crypto scams would be easier.
Another massive problem is the lack of a regulatory framework in the crypto industry. The absence of laws and rules makes it difficult to pinpoint cryptos.
Joseph Rotunda who is the Enforcement Section Committee vice-chair also advises being mindful before investing in cryptocurrencies. Such products may be nothing more than Ponzi schemes and other frauds.
According to the latest estimates, more than $14 billion has been lost to scammers separately in 2021 according to a report published by Chainalysis. They present a massive danger to people and the ones who are just starting their investment careers.
Borg finally added that in order to avoid being a victim of scams and other frauds, it is necessary to stay away from unregistered entities and the ones that do not have a valid license.