Guiding Clients on Crypto Prospects: What to Do?

What can you do when your clients ask you about crypto and its prospects?


144 Listen to this article Your customers might just be familiar with the terms “cryptocurrency” or “digital assets,” and they […]

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Your customers might just be familiar with the terms “cryptocurrency” or “digital assets,” and they might not understand what they refer to or how they operate. Others can be ignorant, while yet others might already have money invested in cryptocurrencies and used them to make purchases of products and services. It is advisable to start by asking your clients what they are aware of regarding the subject because there are so many different things that could happen.

Recent years have witnessed a rise in scandals involving fraud and the misappropriation of client funds, which have brought attention to the extremely real volatility of cryptocurrencies. Investors have seen the value of their investments in digital assets drop. One aspect of investing in cryptocurrencies that you want to mention to your clients is the volatility. Although some investors also gain from cryptocurrency. As a certified financial planner or advisor, it is part of your responsibility to offer a variety of investment options to your clients, assess these possibilities, and explain how making investments in cryptocurrencies could assist or prevent them from achieving their objectives. Although experts may disagree on whether cryptocurrencies will last for a long time, many think they will.

Dealing with the clients

Create a cryptocurrency exchange account first, and then buy coins using an exchange. Debit cards or checking accounts can also be used to purchase cryptocurrency using conventional currency.  Because it may be used to make purchases of goods and services, cryptocurrency is similar to fiat or traditional money. But since it’s exclusively digital, it’s different. Gift cards bought on platforms are a quick and easy way to use cryptocurrencies at shops and vendors. The third-party app is one of the merchants that accepts cryptocurrencies.To protect your money, move it to a noncustodial cryptocurrency wallet. Your personal important data is protected and your transactions are verified by a wallet. Since cryptocurrencies aren’t regulated by any bank or government, they are always accessible everywhere in the world. Because you don’t have to give a seller your personal information, using cryptocurrency can be less risky in terms of fraud or identity theft.

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In no way. Volatility in cryptocurrency can be advantageous or detrimental. Say that you’ve got $2,000 in your cryptocurrency wallet. You may have more money in your account if the value rises. However, if its value drops to, say, $750, there is little you can do to recoup the lost money except wait it out in the hopes that its value would rise.Since either the Department of Labor (DOL) along with the Financial Industry Regulatory Authority (FINRA) have voiced concerns about the possible hazards when investing in crypto-related assets, the board advised CFP professionals in its notice to abide by regulatory guidance.

The board states that CFPs are not discouraged or barred from giving advice regarding cryptocurrencies, but they should be knowledgeable about the asset and its hazards while doing so. The board also emphasized the unique dangers relating to assets tied to cryptocurrencies, such as their aggressive and volatile nature, difficulty in analysis, custody and valuation problems, probable unregistered status, and possibility for further regulation.Whether or whether they intend to utilize cryptocurrencies, customers can be eager for information about them. It’s your responsibility as their financial counselor or planner to explain to them this fairly fresh kind of money, which has potential for investments but also a certain disadvantage. Prepare the facts in advance. This is how you can effectively deal with all the questions asked to you by your clients.

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