It was only a matter of time before mainstream social media got in on the act of virtual assets. This week, Facebook confirmed the worst-kept secret in digital circles: it is launching Libra, its own cryptocurrency.
With a captive audience of more than 1.5 billion users coming to its site every day, Mark Zuckerberg & co must have figured at least some of them were interested in crypto.
Facebook says Libra will allow millions of people who would not normally have access to banking and finance to hold and build assets safely.
And with new additions to the platform including Marketplace, which lets users buy and sell goods to others around the globe, it makes sense to have a common currency that is not impacted by global real-world foreign exchange markets.
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Cryptoassets are unregulated. Your capital is at risk.
A cynic might say that it also keeps money tied to the Facebook platform, so users will continue to spend and sell… and return to the site more frequently.
But, and there is always a “but” with moves like these, US politicians have already called on the company to suspend its plans until cryptocurrencies are properly regulated.
As cryptos are so new, and politicians and regulators have been a little preoccupied recovering from the financial crisis, there is little in the way of regulation of these assets, nor protection for those doing the buying or selling.
This regulation is coming, however, just not as quickly as the new currencies are appearing.
So, as we wait for the protection to arrive, it definitely pays to carry out a sense-check before investing or using these cryptos, on Facebook or anywhere else.
Too many people fall victim to crypto scams on social media. The most common are bogus tweets, often pertaining to be from Elon Musk, that see people from all over the world regularly sending real world currency to buy this fake crypto.
Think about it – people don’t give money away for a cut-price rate in the real world, so why would they do it in a virtual one?
Although cryptocurrencies have been created to be more flexible and universal than their paper-money cousins, it is important to apply the same rules when buying, selling or investing.
A broker like eToro is regulated and has to abide by strict rules. Fake Elon Musk does not.
BUY CRYPTO NOW
Cryptoassets are unregulated. Your capital is at risk.
Until regulators and law-makers have a chance to catch up, it is up to the individual to stay savvy. Yes, it’s complicated, but it pays to take care.
Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework. Your capital is at risk.