Crypto assets can seem exciting—but they come with serious risks. Before you buy, sell, or trade, make sure you understand what you’re getting into. Crypto investing is not risk-free, and anyone considering it should have a clear understanding of the asset and the risks involved.
Crypto prices can rise and fall dramatically, often driven by hype on social media. There are few safeguards against price manipulation, so swings can happen fast.
You might not always be able to sell when you want. Some platforms don’t have enough crypto to cover orders, and demand for certain assets can disappear quickly. Converting crypto back to fiat money isn’t guaranteed.
Crypto platforms and service providers can operate anywhere in the world. If something goes wrong, it may be hard—or impossible—to track them down or recover your money if you have a problem.
Crypto is still evolving. Public interest in or demand for crypto assets may not continue to grow or be sustainable. When a new crypto asset launches, often it is based on an idea – not a proven business model. There’s no guarantee the project will succeed or survive changes in technology, regulations, or politics.
Technology and platforms used for crypto assets, like online wallets and exchanges, can be hacked, transactions can fail or be delayed, and if you lose your password, you could lose access to your crypto forever.
Any individual or company that trades or advises in securities or derivatives in New Brunswick must be registered with the Financial and Consumer Services Commission of New Brunswick. A crypto trading platform (CTP), depending on how it operates, may be subject to securities regulation. Some CTPs claim to be registered businesses, but this is not the same as being registered with a securities regulator. Always check registration with the National Registration Search tool.
Scammers often promise guaranteed returns or offer bonuses for recruiting friends. These are major red flags. Crypto is highly volatile, and guaranteed returns are incredibly unlikely.
Be cautious of:
Claims of regulatory exemption: When someone selling a crypto asset or a related product suggests they don’t need to comply with regulations, be skeptical.
Risk-free promises: Crypto assets have many risks associated with them. As with any investment, be sure you know the risk you are exposed to before you speculate, buy or trade any crypto asset.
High-pressure sales pitches or unsolicited offers: Crypto-related scams typically make use of social media, relationships and high energy pitches of extreme returns to pressure you into buying. The goal is to make you feel afraid of missing out on an opportunity your friends are profiting from. Be very cautious of any crypto-related offer that comes to you through social media and offers that are accompanied by bonus compensation plans for recruiting your friends.
Unregistered activity: Review our section on crypto asset regulation and make sure the company, platform or individual you are considering is properly registered if required. You can search registration using the free National Registration Search tool from the Canadian Securities Administrators.
If something feels off, trust your instincts. Report fraud immediately using the Commission’s Submit a Complaint tool.
You should also be aware of the CRA’s guidance on the tax treatment of cryptocurrency.
No investment is without risk, and crypto assets are particularly risky. While there’s no guarantee that you won’t suffer any losses when speculating, buying or trading crypto assets, here are some things that may help you avoid loss or fraud:
Anyone selling or advising on securities or derivatives in New Brunswick must be registered with the Commission. Check registration by using the free National Registration Search tool from the Canadian Securities Administrators. Report any unregistered or fraudulent activity to the Commission.
Do a quick internet search on the company to see if it has faced any disciplinary action. Check investor warnings see if any regulators have issued warnings about the company:
Ensure any payment method you might use is secure and does not put your personal financial information at risk. Avoid sending money overseas unless you’re sure it’s safe. Once funds leave Canada, it may be impossible to get them back.
Don’t invest in something you don’t understand.