Lori Schock, the SEC’s Director of Investor Education and Advocacy, recently released a statement addressing the risks associated with investing in crypto assets. While some investors may have knowledge and experience in this area, Schock emphasized that for others, it can be a risky endeavor. She specifically advised against the growing interest in digital assets, including memcoins, NFTs, and initial coin offerings (ICOs). While NFTs can be an intriguing way to own digital art and collectibles, they should not be treated as speculative objects.
Schock also emphasized that investment decisions should not be influenced by recommendations from celebrities, athletes, artists, or other influencers on social media. To navigate market fluctuations and protect oneself, she recommended creating a well-diversified investment portfolio that includes a variety of assets, such as stocks and bonds. It is important to diversify within each asset class as well, rather than putting all of one’s money into just one or two stocks, according to the SEC official.
“Market fluctuations are inevitable, and crypto assets often exhibit high volatility. We have witnessed both record highs and record lows. While these investments may initially appear attractive, how would you feel if your investment lost 20%, 30%, or even 50% in a single day?”
Furthermore, the SEC has proposed stricter requirements for cryptocurrency investment advisers and aims to expand custodial protection measures to safeguard investors’ funds.