Cryptocurrency risks

Introduction

This document outlines the key risks associated with cryptocurrency transactions and investments. RED BELT SA markets cryptocurrency services that are provided through our branded platform. Cryptocurrencies are considered high-risk investments, and this summary is designed to help you make informed decisions when engaging with these digital assets.

Partner Role Statement

RED BELT SA collaborates with a regulated financial services provider to bring you innovative digital banking solutions. Our partnership allows us to focus on creating an exceptional customer experience, while our regulated partner manages all financial services, account operations, and ensures compliance with applicable regulations.

1. Key Risks of Cryptocurrency Investments

1.1 Volatility and Capital Loss Risk

Cryptocurrencies are highly volatile financial instruments. Their value can fluctuate dramatically over short periods, potentially resulting in significant financial losses. The cryptocurrency market operates 24/7 and can be influenced by various factors including regulatory announcements, technological developments, market sentiment, and macroeconomic trends.

Important Notice: You could lose all the money you invest in cryptocurrencies. Customers should be prepared for the possibility of losing the full value of their cryptocurrency investments.

1.2 Limited Regulatory Protection

The broader cryptocurrency market remains largely unregulated compared to traditional financial markets. This limited regulatory oversight means:

  • Cryptocurrency investments are not recognized as "specified investments" under many regulatory frameworks
  • They are typically not covered by financial compensation schemes
  • Poor investment performance or losses related to cryptocurrencies are typically not covered by standard dispute resolution mechanisms

    • 1.3 Liquidity Risks

    Liquidity in cryptocurrency markets can vary significantly, which may affect your ability to buy or sell assets when desired:

  • There is no guarantee that you will be able to sell your cryptocurrencies when desired
  • Market conditions, including supply and demand, directly impact liquidity at any given time
  • Operational delays, technology outages, or cyber-attacks may delay transactions
  • Some staking activities may involve lock-up periods during which assets cannot be sold

    • 1.4 Operational Risks

    The technological nature of cryptocurrencies introduces specific operational risks:

  • Technology outages, cyber-attacks, or operational failings may delay or prevent transactions
  • Security breaches could potentially result in loss of assets
  • Software updates or "forks" in blockchain networks may impact asset values or accessibility
  • Smart contract vulnerabilities could lead to unexpected losses

    • 1.5 Complexity of Cryptocurrencies

    Cryptocurrency investments can be complex and difficult to fully understand:

  • Different cryptocurrencies have varying technological foundations, use cases, and risk profiles
  • The underlying technology and economic models can be challenging to evaluate
  • Novel financial products built on cryptocurrencies (such as DeFi protocols) may introduce additional layers of complexity and risk

    • 1.6 Investment Concentration Risk

    Concentrating investments in cryptocurrencies significantly increases risk exposure:

  • We recommend diversifying investments across different asset classes
  • It is advisable not to allocate more than 10% of your investment portfolio to high-risk investments like cryptocurrencies
  • Different cryptocurrencies carry different risk profiles; research each asset thoroughly before investing


    • 2. Risk Variance Among Cryptocurrencies

    Not all cryptocurrencies carry the same level of risk. Factors affecting risk include:

  • Market capitalization and trading volume
  • Technology maturity and security record
  • Development team experience and reputation
  • Regulatory status in different jurisdictions
  • Use case viability and adoption metrics

    • We recommend reviewing cryptocurrency-specific performance statistics available on the platform and conducting additional research to understand the unique risks associated with each digital asset.

    3. Education and Resources

    We encourage all customers to educate themselves about cryptocurrencies and their associated risks before investing. For more information, please consult resources provided by relevant financial regulatory authorities in your jurisdiction.

    4. Disclaimer

    Cryptocurrency investments are high-risk and may not be suitable for all investors. This summary provides a general overview of risks and does not constitute financial or investment advice. Customers are responsible for making informed decisions and should consult professional advisers where necessary.

    Past performance is not indicative of future results. The value of cryptocurrencies can go down as well as up, and you may not recover the amount of your original investment.

    This document is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice. RED BELT SA markets services provided by a regulated platform operator. Users accessing services through RED BELT SA will be subject to the terms, conditions, and policies of the regulated platform operator.

    Last Updated

    Last updated: 20 June 2025

    This document is reviewed regularly to ensure accuracy and compliance with current regulations and platform policies. Users should check back periodically for updates.

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