Advertisment

The Office of Investor Education and Advocacy, a branch of the US Securities and Exchange Commission, has issued an investor alert regarding self-directed individual retirement accounts that promote investment in cryptocurrency.

Disclaim most duties to investors

IRAs are savings accounts with certain tax advantages that are intended to be accessed at the time of the saver’s retirement.

Whoa! London Summit’s new site is LIVE

A self-directed IRA is one that allows alternative investments. These have include real estate, company stocks, intellectual property and precious metals, and, more recently, cryptocurrencies. The main difference between self-directed and regular IRAs is that the latter are handled by an Internal Revenue Service-approved custodian while the former are held by custodians that “disclaim most duties to investors”, according to the warning.

“misimpression that they are regulated by the SEC”

The warning states that the allure of digital assets and initial coin offerings can be used by fraudsters. It aknowledges that such investments can be “fair and lawful”, but says that they “may not provide complete or accurate information to aid investors in making informed decisions.”

The warning says that holdesr of self-directed IRAs are more at risk than usual because the custodians of these funds “typically have only limited duties to investigate the assets or the background of the promoter.” Scam artists can take advantage of this by telling investors that they can be trusted because the custodian approved them, when in fact this is not necessarily the case.

Suggested articles

ATFX GLOBAL STRATEGY CONFERENCE Sponsors Duke of Edinburgh CupGo to article >>

It adds that there is also an increased risk of investors being passive in their examination of their investments because they are not allowed to access the money before a certain age.

The sloppy reality of Japanese cryptocurrency exchanges

The Japanese Financial Services Agency, that country’s financial regulator, released the results of its inspections of local cryptocurrency exchanges.

After reviewing 23 entities, the watchdog found a “sloppy reality”, according to Nikkei. In many cases comapnies’ systems had failed to keep up with their growth in trading volumes, which have grown six-fold in the space of one year. The figure now stands at 792.8 billion yen ($7.1 billion), and most exchanges employee less than 20 people.

The watchdog said that there are currently hundreds of companies awaiting review, and it has decided to be stricter on them as a result of its investigations.

The FSA began its inspections after the massive hack of Coincheck earlier this year.

Get the latest Bitcoin News on The Bitcoin News
Our Social Networks:
Facebook Instagram Pinterest Reddit Telegram Twitter Youtube