If you were planning on using Bitcoin to retire, you might want to think again. Why? Well, because the SEC has recently warned against cryptocurrency retirement funds.
Here’s why.
Cryptocurrency Retirement Funds
As people approach retirement, many are nervous about where they are sitting financially. For these reasons, people are turning to self-directed IRAs, which are savings accounts that allow for alternative investments.
When it comes to self-directed IRAs, typical investments include company stocks and precious metals. However, thanks to the crypto boom, virtual currencies have been added as an option.
But the SEC doesn’t appear to support the addition. According to the commission, just because people can use their retirement funds to invest in cryptocurrencies doesn’t mean they should. There are still a number of risks.
What Did the SEC Say?
The Office of Investor Education, which is a branch of the SEC, issued an investor alert this month. It said the attraction of virtual assets has the potential to be used by fraudsters.
Specifically, the SEC said that now that there are cryptocurrency retirement funds, it’s important to know about the risks and “fraud involved with these kinds of investments that may not be registered.”
Fraud, Fraud, and More Fraud
Are we surprised to see that the SEC is warning investors of the potential for crypto fraud? I’m certainly not. It’s perhaps one of the most common arguments against cryptocurrencies.
It’s not solely to do with cryptocurrency retirement funds, either. Whether you’re crypto investing or crypto trading, there is always going to be the possibility of fraud and crypto scams.
The Takeaway
It’s not as if the SEC made retirement funds investing in cryptocurrencies illegal (like Saudi Arabia has done with crypto trading), so at the end of the day, it’s up to the individual whether they want to continue or not.
That said, bear in mind what the Office of Investor Education said this month.
Stay alert, find a good custodian, understand the rules of self-directed IRAs, and do your homework before giving the green light for an investment!
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