The United States Securities and Exchange Commission (SEC) has warned owners of self-directed Individual Retirement Accounts (IRAs)to be wary of investing in crypto assets that may be unregistered securities or outright scams.
In a bid to protect holders of self-directed Individual Retirement Accounts (IRAs) from falling victim to fraudulent crypto investment schemes, the US regulatory watchdogs, including the SEC, the North American Securities Administration Association (NASAA), and the Financial Industry Regulatory Authority (FINRA) have released a new Investor Alert update.
For the uninitiated, a self-directed IRA is one controlled by a custodian that supports investments in alternative assets such as real estate, cryptocurrency, promissory notes, and other assets that are generally riskier than those offered by registered broker-dealers and investment advisers.
Moreover, the regulators noted that since self-directed IRA custodians are only responsible for storing and administering the assets in the portfolio and do not offer users investment advice or evaluate the quality or legitimacy of investments in the account, investors need to exercise utmost care when dealing with these accounts.
It’s worth noting that the SEC’s strict stance toward crypto has attracted criticisms from industry players of late, with Grayscale CEO Michael Sonnenshein stating that the regulator’s approach is stifling the growth of bitcoin in the US.
