Client or prospect acknowledges there are many inherent risks to owning crypto currency. At this stage, cryptocurrencies, also referred to as blockchain, crypto’s, and crypto-assets are incredibly volatile, and are at best an early stage speculative vehicle. We do not recommend putting more than 30% of your assets into alternative asset classes and no more than 10% in cryptocurrencies. We also realize that certain individuals will have philosophical beliefs that do not make them “traditional” investors. For these individuals, they must acknowledge the many risks in having concentrated positions in crypto’s and the dangers of not being diversified.
For the average retail investor, they must realize the risks inherent in crypto’s and Bitcoin. There is the political risk that crypto’s could be banned by the government. There is the potential that crypto’s could be added to the list of prohibited IRA assets. Since there is no precedent for such a decision, we do not know how the government would treat such assets in such an event. We would hope, investors would have a chance to sell those assets and reinvest proceeds into allowed vehicles but there is no telling what “remedies” the government might have.
Other risks include, but are not limited to: extreme volatility, short track records, new alt coins displacing current crypto’s, an ever-evolving market place, government laws, hacking, quantum computing, safety of exchanges, losing private key(s), no central authority for re do’s, currency risk, geo-political risk, etc.
Investors must also realize that we will not provide ongoing advice to move from one crypto to another, or what crypto to initially buy. We will provide you information to make an informed decision, but it is information that you should vet yourself. All models are hypothetical examples only and are not endorsements. Past performance is not an indication of future returns.
For retirement investor’s, they must use good judgement in regards to asset allocation. Investors must also realize that even though retirement accounts provide great tax-deferral and avoidance strategies, that this may be a moot point if assets go to zero or fall dramatically. In the event of a “home run”, such strategies may prove to be extremely beneficial, but there are no guarantees.
For investors in self-directed IRA’s, they must acknowledge the grave risks associated with “check book” privileges and must take EXTREME CAUTION against engaging in prohibited transactions. Neither The Liberty Advisor, affiliated companies, or contractors will take responsibility for such prohibited actions that the client engaged in on their own. You must consult with your own attorney or tax advisor to safeguard against such actions. CRA has lawyers we refer out to from time to time. There is no obligation to use one of these lawyers and we receive no compensation for such referrals. Client must acknowledge what prohibited transactions exist before setting up a self-directed IRA, and this can also be found in the legal documents used to establish such an account.