SEC Warns Crypto Investments Can Be ‘Exceptionally Risky’

The U.S. Securities and Exchange Commission (SEC) has issued a renewed warning about the potential risks associated with investing in crypto assets. The regulatory body emphasized that investments in the crypto space are often "exceptionally risky" and highlighted the prevalence of fraudulent activities, including scams, Ponzi schemes, and outright theft.

SEC's Crypto Investment Warnings

The SEC's Office of Investor Education and Advocacy reiterated its cautionary message regarding crypto investments on the social media platform X. In a tweet, the authority stated that investments in crypto asset securities can be highly volatile and come with significant risks.

The SEC's investor education office also shared a link to an investor alert published in March titled "Exercise Caution with Crypto Asset Securities."

The alert highlights several key points that investors should consider before engaging in crypto asset investments. Firstly, it emphasizes that entities offering crypto assets may not comply with applicable laws, including federal securities laws. The SEC notes that no crypto asset entity is registered with the SEC as a national securities exchange, which means investors may not benefit from the protection against fraud and misconduct provided by registered exchanges like the New York Stock Exchange (NYSE) or the Nasdaq Stock Market.

The alert also warns about the prevalence of fraud in the crypto space, where scammers take advantage of the increasing popularity of crypto assets to deceive retail investors and cause substantial financial losses. The SEC specifically mentions fraudulent activities such as bogus coin offerings, Ponzi schemes, and cases where project promoters disappear with investors' funds.

Additionally, the alert stresses the importance of having an investment plan and understanding one's risk tolerance and time horizon. These factors are crucial for achieving success in investing.

The ongoing debate over whether crypto tokens should be classified as securities or commodities continues to create uncertainty in the U.S. crypto industry. While SEC Chair Gensler considers all crypto tokens except bitcoin (BTC) to be securities, a recent court ruling on XRP suggests otherwise. The SEC's lack of clarity on ether (ETH), the second-largest cryptocurrency, has also raised concerns and led to accusations of deliberate obfuscation from lawmakers.

Currently, there is a bill in Congress that aims to remove Gensler as the chairman of the SEC due to the perceived lack of transparency and inconsistent regulatory approach.

Furthermore, the SEC is currently evaluating 13 spot bitcoin exchange-traded fund (ETF) applications. Many analysts anticipate that the securities watchdog will approve multiple spot bitcoin ETFs simultaneously early next year.

What are your thoughts on the SEC's warning regarding the risks associated with investing in crypto tokens? Share your opinions in the comments section below.

Frequently Asked Questions

Which is better: sterling silver or 14k-gold?

While gold and silver are both strong metals but sterling silver is less expensive than silver because it contains 92% pure Silver rather than 24%.

Sterling silver is sometimes called fine silver. This is because it is made with a mix of silver and different metals like copper or zinc.

Gold is considered very strong. It takes tremendous pressure to split it apart. If you dropped an object on top to a gold piece, it would shatter into thousands rather than breaking into two halves.

Silver isn't nearly as strong as either gold or silver. If you dropped something onto a sheet made of silver, it would most likely bend and fold easily without breaking.

Silver is used in jewelry and coins. The price of silver can fluctuate according to supply and demande.

Which precious metals are best to invest in retirement?

First, you need to understand what you have and where you are spending your money. You can start by making a list of all your assets. This should include any savings accounts, stocks, bonds, mutual funds, certificates of deposit (CDs), life insurance policies, annuities, 401(k) plans, real estate investments, and other assets such as precious metals. Add all these items together to calculate how much money you have for investment.

If you are less than 59 1/2 years of age, you may be interested in opening a Roth IRA. A traditional IRA allows you to deduct contributions from your taxable income, while a Roth IRA doesn't. However, you will not be able take tax deductions on future earnings.

If you decide you need more money, you will likely need to open another investment account. You can start with a regular brokerage account.

Should you open a Precious Metal IRA

This depends on what your investment goal is and how risk-tolerant you are.

Register now if you want to save money for retirement.

Because precious metals are highly likely to appreciate over time, You can also diversify your portfolio with them.

Furthermore, the prices of gold and silver tend to move together. This makes them better choices when you want to invest in both assets.

Precious metal IRAs are not recommended for anyone who isn't planning to use their money for retirement and doesn't want any risk.

Which type of IRA can be used to store precious metals?

Employers and financial institutions often offer Individual Retirement Accounts (IRA) as an investment vehicle. Through an IRA, you may contribute money to an account that grows tax-deferred until withdrawn.

An IRA allows for you to save taxes while still paying taxes when you retire. This means you can save money and pay taxes later on the money that you have deposited to your retirement account.

The beauty of an IRA is that contributions and earnings grow tax-free until you withdraw the funds. There are penalties for early withdrawal if you do.

After 50 you can still make contributions to your IRA. There is no penalty. If you take out of your IRA during retirement you will owe income and a 10% federal penal.

Refunds received before the age of 591/2 are subject to a penalty of 5% from the IRS. There is a 3.4% penalty for withdrawals between the ages 70 1/2 and 59 1/2.

The IRS will penalize withdrawals of more than $10,000 annually.

How can I withdraw from an IRA with Precious Metals?

If you have an account with a precious-metal IRA company like Goldco International Inc, you might consider withdrawing your funds. This way, when you decide to sell your metals, they will still be worth much more than if you had left them inside the account.

If you are unsure how to withdraw money from your precious metal IRA, here is what you need to know.

First, you need to find out if the provider of your precious metal IRA allows withdrawals. Some companies permit this, while some don't.

Second, find out if you are eligible for tax-deferred gains from selling your metals. This benefit is offered by most IRA providers. Some do not, however.

Third, check with your precious metal IRA provider to see if any fees are associated with taking these steps. It is possible that the withdrawal will be more expensive.

Fourth, it is important to keep track of your precious-metal IRA investments for at most three years after you have sold them. For capital gains to be calculated, wait until January 1, each year. Fill out Form 8949 and follow the instructions to calculate how much gain you've realized.

In addition to filing Form8949, you must also notify the IRS about the sale or purchase of precious metals. This will ensure that you pay taxes on any profit earned from your sale.

Consult a trusted attorney and accountant before selling your precious materials. They can help ensure you follow all necessary procedures and avoid costly mistakes.

How much should precious metals make up your portfolio?

The best way to avoid inflation is to invest in physical gold. Because precious metals are a long-term investment, you can not only buy in to the current value but also the future potential of these assets. You can expect your investment to increase in value with the rise of metal prices.

If you hold on to your investments for at least five years, you will receive tax benefits on any gains. Capital gains taxes will apply if you sell the investments within this time period. You can learn more about gold coins by visiting our website.

What are the fees associated with an IRA for gold?

The average annual fee of an individual retirement account is $1,000. There are many types to choose from, such as Roth, SEP, SIMPLE, traditional and Roth IRAs. Each type has its own set requirements and rules. You may be required to pay taxes on earnings earned from investments that aren't tax-deferred. You must also consider how long you want to hold onto the money. If you plan to keep your money longer, you can save more money by opening a Traditional IRA instead of a Roth IRA.

A traditional IRA allows you to contribute up to $5,500 per year ($6,500 if you're 50 or older). The Roth IRA allows unlimited contributions each year. The difference between the two is simple. A traditional IRA can be withdrawn after retirement without any taxes. You'll owe tax on any Roth IRA withdrawals.


  • 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. (
  • SEP-IRA”Simplified employee pension” For self-employed people like independent contractors, freelancers, and small-business ownersSame tax rules as traditional IRASEP IRA contributions in 2022 are limited to 25% of compensation or $66,000, whichever is less4. (
  • The IRS also allows American Eagle coins, even though they do not meet gold's 99.5% purity standard. (
  • Silver must be 99.9% pure • (

External Links

How To

Precious Metals that have been approved by the IRA

IRA-approved precious materials are excellent investments whether you're looking for ways to save money for retirement or to invest in your next business venture. Diversifying your portfolio can protect you from inflation with a variety of options, including silver coins and gold bars.

Precious Metal Investment Products come in two main formats. Bars and coins, which are physical bullion products, can be considered tangible assets as they are in tangible form. ETFs, on the other hand are financial instruments that track price movements of an underlying asset such as gold. ETFs can be purchased directly from the company issuing them, and trade in the same way as stocks on stock exchanges.

There are various types of precious metals available for purchase. Silver and gold are frequently used for ornaments and jewelry making, while palladium and platinum are more often associated with luxury items. Palladium has a tendency to retain its value longer than platinum making it an ideal choice for industrial uses. While silver can be used for industrial purposes, it is more commonly preferred for decorative purposes.

Due to the expense of mining and refining natural materials, physical bullion is more expensive. But, they are generally more secure than paper currencies and provide buyers greater security. For example, consumers may lose confidence in the currency and look for alternatives when the U.S. dollar loses purchasing power. However, physical bullion products don't rely on trust between nations or companies. Instead, they are backed by governments and central banks, giving customers peace of mind.

Prices for gold fluctuate depending on demand and supply. Demand rises, and the price goes up. On the other hand, supply falls when demand exceeds demand. This dynamic creates opportunities for investors to profit from fluctuations in the price of gold. These fluctuations are good for investors who have physical bullion products as they get a better return on their investment.

Precious metals, unlike other investments, are immune to economic recessions or changes in interest rates. The price of gold is likely to continue rising as long the demand for it remains strong. In times of uncertainty, precious metals can be considered safe havens.

The most popular precious metals include:

  • Gold – The oldest form of precious metal, gold is also known as “yellow” metal. While gold is a well-known element, it is very rare to find underground. Most of the world's gold reserves are in South Africa, Australia, Peru, Canada, Russia, and China.
  • Silver – Silver is the second most valuable precious metal after gold. Silver can be mined from naturally occurring deposits, much like gold. However, silver is more commonly extracted from ore than from rock formations. Because of its malleability and durability, as well resistance to tarnishing and conductivity, silver is widely used by industry and commerce. The United States produces over 98% of all global silver production.
  • Platinum – Platinum is the third-most valuable precious metal. It can be used for industrial purposes, such as in fuel cells and catalytic converters. You can also use platinum in dentistry to make dental crowns and bridges.
  • Palladium – Palladium is fourth most valuable precious metal. Because of its strength as well as stability, its popularity is increasing rapidly among manufacturers. Palladium can also be used in electronics, military technology, and automobiles.
  • Rhodium – Rhodium is fifth most valuable precious metal. Rhodium, although it is rare, is highly sought after for its use in automotive catalysts.
  • Ruthenium-Ruthenium is the sixth-most valuable precious metal. There are limited quantities of platinum and palladium. However, ruthenium is abundant. It is used to make steel and engines for aircraft, as well chemical manufacturing.
  • Iridium- Iridium, the seventh most precious precious metal, is also known as Iridium. Iridium plays an important role in satellite technology. It is used for the construction of satellites with orbital capabilities that transmit television signals and other communications.
  • Osmium – Osmium, the eighth most precious precious metal, is also known as Osmium. Because of its extreme temperature resistance, Osmium is often used in nuclear reactors. It's also used in jewelry, medicine and cutting tools.
  • Rhenium – Rhenium is the 9th most valuable precious metal. Rhenium is used in refining oil and gas, semiconductors, and rocketry.
  • Iodine — Iodine has the highest value of all precious metals. Iodine's uses include radiography, photography and pharmaceuticals.


By: Kevin Helms
Title: SEC Warns Crypto Investments Can Be ‘Exceptionally Risky’
Sourced From:
Published Date: Mon, 11 Dec 2023 00:30:41 +0000

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