SEC Issues Warning To Investors About IRA's That Promote Cryptocurrencies

The U.S. Securities and Exchange Commission (SEC) is worried about investors placing their retirement funds into cryptocurrencies. The Office of Investor Education and Advocacy, one of the different branches at the SEC, decided to issue an investor alert regarding self-directed individual retirement accounts that promote investing in different virtual currencies.

There are many different ways to invest in retirement funds, and IRAs are savings accounts with some tax advantages that should be accessed at the time of the saver’s retirement. But there are also self-directed IRAs, which include alternative investments such as real estate, company stocks, intellectual property or precious metals.

And yes, it is also possible to invest in virtual currencies with self-directed IRAs. One of the main differences between self-directed and regular IRAs is that the regular one is handled by an internal Revenue Service (IRS) -approved custodian. Self-directed IRAs are held by custodians that ‘disclaim mos duties to investors.’

The warning made by the SEC says that there are some digital assets that can be used by fraudsters. Furthermore, Initial Coin Offerings (ICOs) and their tokens are very risky investments that could harm financially the investor.

Moreover, the regulatory agency says that these investments are made without being informed because ICOs may not provide all the required data for investors.

Holders of self-directed IRAs are usually riskier than those that use traditional custodians. Scam artists can take advantage of this situation saying that they are approved by the custodian when it may not be the case.

At the end of 2017 and at the beginning of 2018, investors were placing their retirement funds or even taking credit to invest in a virtual currency market that was very bullish. Since that moment, the market cannot recover.

More Information About Japanese Crypto Exchanges

The Japanese financial watchdog – the Japanese Financial Services Agency (FSA) – is not happy with the inspection it did on different cryptocurrency exchanges in the country. In some of the cases, companies’ systems were not able to support the higher trading volume. In just one year, they grew six times, standing at almost $800 billion yen (close to $7.1 billion dollars).

Additionally, the agency informed that there are several other companies that are trying to receive approval from the FSA, but the regulatory agency informed that they will be stricter due to the result of the investigations.

It is important to remember that the FSA started with inspections on virtual currency exchanges and companies after the massive hack experienced by the crypto exchange Coincheck at the beginning of the year.

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B.E.G. Editorial Team is a gracious group of giving cryptocurrency advocates and blockchain believers who want to ensure we do our part in spreading digital currency awareness and adoption. We are a team of over forty individuals all working as a collective whole to produce around the clock daily news, reviews and insights regarding all major coin updates, token announcements and new releases. Make sure to read our editorial policies and follow us on Twitter, Join us in Telegram. Stay tuned. #bitcoin

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