1. The Certified Financial Planner Board of Standards (CFP Board) and the Chartered Financial Analyst Institute (CFA Institute) have recently issued warnings and guidelines regarding cryptocurrency investing and advice.
2. The CFP Board released a “Notice to CFP Professionals Regarding Financial Advice About Cryptocurrency-Related Assets” in November, outlining the best practices and compliance requirements that CFP holders need to adhere to.
3. Federal regulators such as the Securities and Exchange Commission and the Department of Labor as well as Finra, the largest independent industry regulator, have also issued warnings and guidelines regarding cryptocurrency investing.
The cryptocurrency industry has been under increased scrutiny from both government regulators and financial industry organizations in recent years. The Certified Financial Planner Board of Standards (CFP Board) and the Chartered Financial Analyst Institute (CFA Institute) have recently issued warnings and guidelines regarding cryptocurrency investing and advice.
The CFP Board released a “Notice to CFP Professionals Regarding Financial Advice About Cryptocurrency-Related Assets” in November, outlining the best practices and compliance requirements that CFP holders need to adhere to. This includes an obligation to disclose all material facts related to any investments or advice provided. The document also states that CFP professionals must “use reasonable diligence, care, skill and prudence when providing financial advice about cryptocurrency-related assets”.
The CFA Institute also issued guidelines for those who hold the Chartered Financial Analyst (CFA) designation. The organization stated that CFA holders must “consider all relevant risks, including but not limited to, market, liquidity, operational, legal, regulatory, reputational, and accounting risks” when providing advice or making investment recommendations related to cryptocurrencies.
In addition to the warnings issued by the CFP Board and CFA Institute, federal regulators such as the Securities and Exchange Commission and the Department of Labor as well as Finra, the largest independent industry regulator, have also issued warnings and guidelines regarding cryptocurrency investing. The SEC has issued several investor alerts, cautioning investors against potential fraud, market manipulation, and other risks associated with cryptocurrencies.
Given the increased attention on cryptocurrencies, advisors and other financial professionals should take heed of the warnings and guidelines issued by the CFP Board, CFA Institute, and other regulatory bodies. Financial advisors should make sure to conduct due diligence and understand the risks of investing in cryptocurrencies before recommending any investments. Additionally, advisors should ensure that they are in compliance with all applicable laws, rules, and regulations when providing investment advice. Furthermore, advisors should be sure to disclose all material facts related to any investments or advice provided. By doing so, advisors can help protect their clients from potential risks and ensure that their advice is provided in an ethical and compliant manner.