Since 2020, the crypto-asset space has continued to evolve and, despite volatility in the market, which experienced a major downturn during the 2022 “crypto winter,” retail investors, in both advanced economies and emerging market jurisdictions, continue to invest in the crypto-asset market. It has been observed that, in many cases, these investors tend to be younger and more demographically diverse, often rely on social media for investment information, and tend to overestimate their investment knowledge and experience.
Educational messages for retail investors should include:
- Investments in crypto-assets can be exceptionally risky and these assets are often volatile.
- Investors should be wary of investments promoted on social media and use skepticism when following “influencers.”
- Crypto-asset investments might lack basic investor protections, as those offering crypto-asset investments or services may not be complying with applicable law, including registration and licensing requirements.
- Investments offered in compliance with a jurisdiction’s regulatory framework confers investors with certain investor protections.
- Fraudsters continue to exploit the rising popularity of crypto-assets to lure retail investors into scams, often leading to devastating losses.
- Understanding the nature of investing generally, including having an investing plan, and understanding risk tolerance and time horizon, as well as understanding the nature of investing in crypto-assets, can be critical to overall and long-term investing success.