With the price of ether up by nearly 200% since last year, investing in cryptocurrency can seem like the most obvious choice.
But as anyone who has been around too many crypto bros can tell you, it also comes with significant volatility and risk: cryptocurrency is, according to an annual report by the North American Securities Administrators Association (NASAA), the asset class that poses the biggest risk to investors.
“Before you jump into the crypto craze, be mindful that cryptocurrencies and related financial products may be nothing more than public facing fronts for Ponzi schemes and other frauds,” Enforcement Section Committee Vice-Chair Joseph Rotunda said in a statement.
The reason has largely to do with regulatory rules that struggle to catch up to the high number of new digital currencies (often launched by people with no finance background) hitting the market. The success of bitcoin and ether are often used to stir up a craze around a concept that is still poorly understood by the general population.
NFTs, which stand for non-fungible tokens and are used to obtain ownership of a piece of online content, are another crypto subcategory currently attracting a lot of investor attention — while popular ones like the Bored Ape Yacht Club can sell for millions, fake ones are already popping up online. (Based predominantly on the ethereum network, most NFTs sell for ether.)
Other high-risk investments include anything to do with promissory notes, social media investment…