Understanding the Risks of Crypto Investing
Gary Gensler, the Chairman of the U.S. Securities and Exchange Commission (SEC), has recently expressed concerns about investing in crypto assets. In a series of social media posts, Gensler highlighted the potential risks and lack of regulatory compliance in the crypto industry. His warnings come at a time when investors are eagerly awaiting the approval of spot bitcoin exchange-traded funds (ETFs).
Non-Compliance with Applicable Laws
Gensler emphasized that those offering crypto asset investments and services may not be complying with applicable laws, including federal securities laws. This means that investors in crypto asset securities may not have access to key information and important investor protections.
The Volatility and Risk of Crypto Assets
Investing in crypto assets can be exceptionally risky and volatile, according to Gensler. He pointed out that major platforms and crypto assets have become insolvent or lost value in the past. Therefore, investors should be aware that investing in crypto assets involves significant risk.
Exploitation by Fraudsters
Gensler also warned about the rising popularity of crypto assets being exploited by fraudsters. Retail investors are often lured into scams, including bogus coin offerings, Ponzi and pyramid schemes, and outright theft. In some cases, project promoters disappear with investors' money, leaving them empty-handed.
The Deadline for Spot Bitcoin ETF Approvals
The SEC is expected to make a decision on spot bitcoin ETFs by Wednesday, with Cathie Wood’s Ark Invest and 21shares among the applicants. Some speculate that Gensler's crypto warnings on social media indicate that the SEC is about to approve spot bitcoin ETFs. However, the final decision is yet to be announced.
Controversy Surrounding Gensler's Approach
Gensler has faced criticism for his enforcement-centric approach to regulating the crypto industry. Some U.S. lawmakers are seeking to remove him as the chairman of the SEC. The weekend prior to his warnings, the SEC issued a cautionary statement about the fear of missing out (FOMO) in the crypto market.
In conclusion, Gary Gensler's warnings about crypto investing highlight the need for investors to fully understand the risks and potential lack of regulatory protections in the industry. As the deadline for spot bitcoin ETF approvals approaches, investors should proceed with caution and conduct thorough research before making any investment decisions.
What are your thoughts on Gary Gensler's warnings? Share your opinions in the comments section below.
Frequently Asked Questions
How to Open a Precious Metal IRA
It is best to open an IRA with precious metals through a Roth Individual Retirement Account.
This type of account is superior to other types of IRAs in that you don't pay any taxes on the interest earned from your investments, until you withdraw them.
This makes it attractive to those who want a tax break but still want to save some money.
There are many other options than investing in gold and silver. You can put your money in almost any item that meets the IRS guidelines.
Examples include platinum, palladium and rhodium.
There are several ways you can invest in precious metals. There are two main options: buying bullion bars and coins, and purchasing shares in mining companies.
Bullion Coins and Bars
One of your easiest ways to get into precious metals is to purchase bullion coins. Bullion is a generic term that refers only to physical ounces in gold or silver.
You get actual bullion bars and coins when you purchase bullion coins.
While you may not immediately see any change after buying bullion coins and bars in a store, there will be some long-term benefits.
You will receive a tangible piece if history, for example. Each coin and bar has its own unique story behind it.
You'll often find that the face value of a coin is far lower than its nominal value. For example, the American Eagle Silver Coin was only $1.00 per ounce when it was introduced in 1986. However, today, an American Eagle Silver Coin is more than $40.00 per Ounce.
Many investors prefer bullion coins and bullion bar to futures contracts because of the dramatic increase in bullion's value.
If you are looking to invest in precious metals, there is another option: investing in mining shares. You're investing in the company’s ability to produce precious metals.
In return, you will receive dividends based on the company's profits. These dividends will be used to pay shareholders.
Furthermore, the company has the potential to grow. As the demand for the product grows, the company's share price should increase.
You should diversify because these stocks have a tendency to fluctuate in their prices. This allows you to spread your risk among multiple companies.
But, remember that mining companies, like all stock market investments, are susceptible to financial loss.
If gold prices drop significantly, your share of ownership could be worthless.
The Bottom Line
Precious metals like gold and silver can provide safety during economic uncertainty.
However, both gold and silver are subject to wild swings in price. If you're looking to make a long-term, profitable investment in precious metallics, then consider opening a precious precious metals IRA Account with a reputable business.
This allows you to benefit from tax advantages and physical assets.
Which is stronger? 14k Gold or Sterling Silver?
Both gold and silver make strong metals. Sterling silver is more affordable than sterling silver which has only 24% pure silver.
Sterling silver is also known as fine silver because it is made from a mixture of silver and other metals such as copper and zinc.
Gold is generally considered to be very strong. It is very difficult to separate it from its metal counterpart. If you drop something on top of a chunk of gold it will shatter into thousands of pieces rather than breaking into two halves.
But silver isn’t nearly as sturdy as gold. If you dropped an item onto a sheet of silver, it would probably bend and fold without shattering.
Silver is often used to make jewelry and coins. Silver's value can fluctuate depending on the supply and demand.
What is the best precious metal to invest in?
An investment in gold can yield high returns on its capital. It can also protect against inflation and other risks. As people become worried about inflation, the value of gold tends rise.
It's a good idea to purchase gold futures. These contracts will guarantee that you will receive a specific amount of gold at an agreed price.
However, futures on gold aren't for everyone. Some prefer to have physical gold.
They can easily trade their gold with others. They can also trade it anytime they like.
Many people prefer not to pay taxes on their gold. They buy gold directly from government to do this.
This will require you to make multiple trips to your local postal office. You must first convert any existing gold into coins or bars.
You will then need to obtain a stamp for the coins and bars. Then, send them to the US Mint. They will then melt down the bars and coins to create new coins.
These new bars and coins have the original stamps stamped on them. This means they are legal tender.
But if you buy gold directly from the US Mint, you won't have to pay taxes.
Decide which precious metal you would like to invest.
- The maximum yearly contribution to an individual's IRAs is currently $6,000 ($7,000 for those 50 years or older), or 100% of earned income, whichever is less. (monex.com)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal so that you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- To qualify as IRA allowable precious metals and be accepted by STRATA, the following minimum fineness requirements must be met: Gold must be 99.5% pure, silver must be 99.9% pure, and platinum and palladium must both be 99.95% pure. (stratatrust.com)
- Same tax rules as traditional IRA SEP IRA contributions in 2022 are limited to 25% of compensation or $66,000, whichever is less Before setting up a Silver IRA, understand the fees and IRS restrictions. (sltrib.com)
- Gold IRA, Add Some Sparkle to Your Retirement Nest egg
- Understanding China's Evergrande Crisis – Forbes Advisor
How To Buy Gold For Your Gold IRA
The term precious metal refers to gold, silver, palladium and rhodium. It refers only to elements with atomic number 79-110 (excluding helium). These elements are considered valuable because they are rare and beautiful. Precious metals that are most commonly used include silver and gold. Precious metals can be used to make money, jewelry, industrial products, and art objects.
Supply and demand affect the gold price daily. The demand for precious materials has increased dramatically over the last decade as investors seek to find safe havens in volatile economies. Prices have increased significantly because of this demand. However, the increasing cost of production has made some people concerned about investing in precious metals.
Because gold is rare and durable, it makes a good investment. Contrary to other investments, gold does not lose its value. Gold can be bought and sold without tax. You have two options to invest in gold. You can either purchase gold bars and coins or invest in futures gold contracts.
Physical gold coins and bars provide immediate liquidity. They are easy to store and trade. However, they are not very inflation-proof. You can protect yourself against rising prices by purchasing gold bullion. Bullion is physical gold, which comes in many sizes and shapes. Some billions come in one-ounce pieces, while others come in larger sizes like kilo bars. Bullion is often stored in vaults, which are safe from fire and theft.
Buy gold futures to own shares and not actual gold. Futures allow you to speculate as to how the gold price will change. Gold futures allow you to be exposed to its price without owning any physical commodity.
For instance, if my goal was to speculate on the movement of the gold price, I could purchase a contract. My position will change when the contract expires. It can be either “longer” or “shorter.” A long contract means that I believe the price of gold will go higher, so I'm willing to give someone else money now in exchange for a promise that I'll get more money later when the contract ends. A short contract on the other side means that I believe gold's price will fall. I'm happy to accept the money right now in exchange of the promise that I'll make more money later.
I will be paid the specified amount of the contract plus interest after the contract expires. That way, I've gained exposure to the price of the gold without actually having to hold the gold myself.
Precious Metals are great investments as they are difficult to counterfeit. Paper currencies can be easily faked by printing new bills. Precious metals are not easy to counterfeit. Precious metals have remained stable over time because of this.
By: Kevin Helms
Title: Gary Gensler's Warnings on Crypto Investing: What You Need to Know
Sourced From: news.bitcoin.com/sec-chair-gary-gensler-issues-crypto-warnings-as-spot-bitcoin-etf-decision-looms/
Published Date: Tue, 09 Jan 2024 00:30:05 +0000