Crypto assets are digital assets that use cryptography (a method to secure data), peer-to-peer networking, and a public ledger to create, verify and record transactions. Crypto assets include cryptocurrencies, crypto funds and digital tokens. Bitcoin and Ether are examples of cryptocurrencies.
Crypto assets are very risky. Changes in the crypto asset space are constant, and prices may change dramatically with little warning. If you chose to buy, sell, or speculate in crypto, be aware you could lose some or all of your investment.
There are many risks with crypto assets including:
Some crypto asset exchanges and platforms are unregulated
Unregulated crypto asset exchanges and trading platforms present significant risks to investors because key investor protections may be missing including secure handling of client funds, safekeeping of assets, protection of personal information and measures against market manipulations or other harmful practices.
Canadians considering buying or selling crypto assets, should use platforms registered with Canadian securities regulators which includes certain CIRO Members.
You should also be aware of and not use platforms banned by Canadian securities regulators.
Some crypto trading platforms claim to be registered businesses, but this isn’t the same as being registered with a securities regulator.
Crypto assets are volatile and high-risk investments
Crypto assets are risky investments because their value may rise and fall suddenly and significantly. These changes in value are hard to predict.
You may be a victim of hacking, fraud and scams
Fraudsters can hack into the technology or platforms used for crypto assets, like online wallet companies or crypto exchanges to try to steal your keys and gain access to your wallets and your crypto assets.
More and more investment scams focus on crypto assets through Internet ads, social media or websites telling you to buy crypto assets and promising high returns.
Your crypto assets are not covered by a protection fund
The Canadian Investor Protection Fund does not cover crypto assets. Federal and provincial/territorial deposit insurance plans also don’t cover crypto assets.
If the crypto trading platform (CTP) or wallet provider that has your crypto assets goes out of business or declares bankruptcy, you may lose the asset you invested in.