So, you want to invest in cryptocurrency.
You should first be aware of the online threats to your crypto prior to investing. Here are the common risks associated with holding crypto assets and the best ways you can secure them.
What are the biggest threats with crypto investing?
Risk #1: Your Investments are Uninsured
There is no depositor insurance associated with cryptocurrency. For instance, the crypto trading platform or digital wallet provider could go out of business, leaving you with nothing.
When you invest with a bank or a credit union, your money is protected by deposit insurance. No one has ever lost money through the Canadian Deposit Insurance Guarantee Corporation (CDIC).
Risk #2: Hacking, Fraud, and Scams
Naturally, trying to invest in primarily digital assets comes with the risk of hackers, fraudsters, and scammers. Some common access points include fake advertisements and illegitimate sign-up offers.
When you invest with a bank or credit union, you can trust the investment offer and the online application form. There is also a guaranteed principal on GICs, RRSPs, and TFSAs that give you peace of mind your money is protected.
#3: Crypto Assets Themselves are Risky
Cryptocurrency is still a very volatile asset to invest in so there is always an inherent risk involved with entering this market. If you would like to take on a bit more risk than what a GIC offers, a better option might be meeting with our Innovation Wealth team. They could help you build a portfolio with bigger growth opportunities while stay retaining the investment comfort you crave.
What are the best ways to secure your crypto assets?
The first and most important step in reducing the risks associated with crypto investing is doing your research. It’s important to understand the ins and outs of the coin itself but also all other digital technologies involved with your transaction.
Look into the digital wallet provider to make sure they're a reliable source who you can trust for the long-term. Also, look for crypto trading platforms that are regulated and have a large quantity of active users.
Beyond that, investigate the different seller and platform policies. Are returns allowed? Are refunds available? Is there a way to contact someone if something goes wrong with your purchase or exchange? These are all important questions to ask before entering the crypto sphere.
Finally, if you’ve been a victim of crypto-related fraud, hacking, or scams, reach out to the Canadian Anti-Fraud Centre. And for specific crypto trading platform complaints, you can contact the right securities regulator.
Need help with a safer investment option? Reach out to us or our Innovation Wealth team! We’d be happy to help you get started today.