The SEC warned investors that crypto-issued IRA retirement accounts might be considered securities.
An
Individual Retirement Account (IRA) provides investors with tax
benefits for retirement savings, and custodians for self-directed
accounts also allow investors to invest in crypto.
- The
SEC warned that self-directed IRAs sometimes offer crypto investments
and "may be securities that are offered without SEC registration."
- The
SEC argues that under federal securities law, some crypto trading
platforms are trading securities; crypto companies should register with
the SEC.
- "Many of the trading platforms for these
crypto-assets refer to themselves as 'exchanges,' which may give
investors the misimpression that they have registered with the SEC,"
reads the statement issued by the securities watchdog.
- Alternative
investments may also lack liquidity either because of extended holding
periods, restrictions on redemptions, or limited markets.
- This means it might be difficult to easily sell these investments when you want to, including when you retire.
- Investors
seeking protection from the SEC when trading digital assets should use
platforms that are registered with the SEC or a regulatory agency in
their jurisdiction.
- As a rule of thumb, investors should not
assume the trading protocols meet the standards of an SEC-registered
national securities exchange.
- Find the full list of registered exchanges here.
- Check if the crypto platform operates as an ATS and has filled out a form with the SEC.
- Other
things to consider are trading protocols, fees, potential cybersecurity
threats (hacking vulnerability), and lastly, does the platform hold the
users' assets, and how are they safeguarded?
