Beware: The businesses that maintain your crypto aren’t insured the way in which banks are

Crypto crash and gold sell-off show there's no place for investors to hide

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Editor’s Note: This is an updated version of an article that first published on June 13, 2022.

The “crypto winter” that hit earlier this year walloped digital asset prices and served as a healthy reminder that cryptocurrencies are highly risky, volatile investments.

But now, in the wake of crypto exchange FTX’s implosion, crypto investors were reminded of another risk they face: Crypto accounts lack guaranteed protections when the exchange or platform provider goes belly up.

Traditional savings and investment accounts can never be 100% safe in the event an institution becomes insolvent, either. But most banks and brokerages, as well as 401(k) plans, do provide federally guaranteed protections and other insurance.

Crypto custodial accounts, however, do not enjoy those same safeguards, in part because the legal, tax and regulatory frameworks – to say nothing of the legal definitions of what a…

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