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Every galaxy has its dangers and risks, including the Crypto Verse. You might encounter all sorts of things out there, so you’ll need to watch where your spaceship flies. Even seasoned astronauts (and traders) need to check the cosmos for freewheeling debris, traps set by aliens or rocky terrain.
Crypto has seen tremendous growth and popularity, especially in recent years. However, we all know the saying, “with high reward comes high risk” — and it’s true that the Crypto Galaxy is indeed volatile and very risky.
Also, the Crypto Galaxy is but a baby, compared to “oldies” such as Gold, which has been around for centuries. With a smaller market capitalisation (share price multiplied by total shares held), actions of investors have a larger impact than with a much larger pool, thus, volatility.
Although the level of institutional adoption and talent flow into crypto is immense, crypto isn’t particularly tied to an actual asset (though there are stablecoins, which are pegged to real-world currencies) so much
of its market value is speculative.
The recent Terra (Luna) crash is also fresh in our minds. While the Monetary Authority of Singapore (MAS) recognises the crypto ecosystem to be a potentially transformative technology, the regulatory body is also watching crypto risks closely (source).
However, that doesn’t mean all crypto activities have been put on hold.
The MAS has granted licences or in-principle approvals to a small list of digital payment tokens service providers to date, including Luno Singapore (source).
“The licensing process is stringent, and it needs to be,
because we want to be a responsible global crypto hub with innovative players, but also with risk management capabilities.
We only approve applicants with strong governance structures, fit and proper board and management as well as their track records..”
~ Ravi Menon, Managing Director of Monetary Authority of Singapore (source)
When you know the risks, it’s easier to spot the warning signs and quickly steer your spaceship away before anything happens. Even if you don’t make a clean getaway, knowing what you’re dealing with could help you get out of a sticky situation faster. Here are some crypto risks to look out for in the cryptoverse.
General rule of thumb: If it sounds too good
to be true, it probably is.
Scams are rampant, even in the crypto galaxy. Here are some common tactics crypto scammers use to reel you in.