Fraud Prevention Month is just wrapping up and if you didn’t know about it, you’re not alone. This hallowed month is celebrated by Banks, Corporations and Regulators around the globe who use this opportunity to warn employees, client and the public about (you guessed it), fraud prevention. Generally, this is an opportunity for financial organizations to discuss the newest and most innovative scams that we’re all exposed to on a daily basis and create awareness around those issues. If you think back in the month, you’ve likely noticed more emails, advertisements on social media and other warnings about frauds and scams (the ‘ah’ moment). This month, the Canadian Securities Administrators (CSA) chose to warn consumers about a host of issues including crypto assets.
Quick aside: A ‘crypto asset’ is defined by the CSA as digital assets, “that use public ledgers over the internet to prove ownership.” The CSA prefers this term to “cryptocurrencies” because they are not legal tender approved by the Bank of Canada.
CSA members are seeking to highlight important considerations for the consumer when investing in crypto. They highlight a series of reasonable questions that consumers should consider, like, “do I understand what I am investing in?” and “can I afford to lose the money I’m willing to invest in crypto assets?”. These questions are outlined here.
The CSA highlights the importance of consumers researching crypto asset investments and ensuring that the Firm they’re investing in is registered with the National Registration database as a Dealer. There are only a handful of crypto asset trading platforms that have been granted exemptive relief to offer crypto products in Ontario and they’re listed here.
The Alberta Securities Commission (ASC) posted a guide for investors on crypto assets that includes a helpful summary about the products, potential tax implications, and guidance on crypto-related investment scams and fraud, which include being wary of online groups that promote experts to help people invest in crypto and keeping an eye out for promises of high returns with little or no risk of loss.
While March Fraud Awareness month may not register with most, the CSA’s approach to crypto assets and consumer awareness this month is admirable and the resources provided are worth checking out, particularly for first-time investors or people with an interest in crypto assets and the scams that could be associated with them.