E*TRADE offers securities and futures products that allow investors to gain indirect exposure to various underlying cryptocurrencies. Cryptocurrencies are oftentimes also referred to as virtual currencies, digital currencies or digital assets. You should carefully consider and understand the risks involved in trading these cryptocurrency related products. Markets for cryptocurrencies are highly volatile and risky. Unlike other instruments, cryptocurrency may not entitle the holder to any ownership stake or future cash flow. Accordingly, the value of a particular cryptocurrency may be based solely on market supply and demand, as opposed to any underlying fundamentals. Since the value of cryptocurrencies may be derived from the continued willingness of market participants to trade in these products, customers may face the total loss of their investment in a cryptocurrency related product should the market for that instrument disappear.
You should use caution when trading in any cryptocurrency related product, as such products may have direct, indirect, derivative, or leveraged exposure to cryptocurrency. The type of exposure to cryptocurrency as well as the structure of any particular cryptocurrency related product may impact such product’s ability to track the price of any reference cryptocurrency, its ability to achieve its investment objective, or its performance generally. To determine the level and type of exposure to cryptocurrency and whether that level of exposure is appropriate for your risk tolerance, carefully read the prospectus, contract specifications, or other offering materials for any product you are interested in investing in. Additionally, please note that although certain products available on E*TRADE may be identified as cryptocurrency related products, such product identification is performed by third parties not affiliated with E*TRADE and are presented for educational purposes only. Other products may have corporate investments or other exposure to cryptocurrency that are not identified as cryptocurrency-related products on E*TRADE.
Investing in cryptocurrency related products may present other risks, including, without limitation:
- A heightened risk of fraud, as innovations and new technologies like cryptocurrencies are often used to perpetrate fraudulent investment schemes.
- While assets in securities accounts at U.S. brokerage firms are often insured by the Securities Investor Protection Corporation (SIPC), and assets in bank accounts at U.S. banks are often insured by the Federal Deposit Insurance Corporation (FDIC), cryptocurrencies held in a third-party digital wallet service or cryptocurrency exchange do not have similar protections, and the insolvency or dissolution of a third-party digital wallet service or cryptocurrency exchange due to fraud, technical glitches, hackers, malware, or other reasons may affect the value of cryptocurrencies and related products.
- Cryptocurrency related products might not be registered under and regulated by the same rules and regulations that govern other similar products that do not have cryptocurrency exposure. Accordingly, such products might not be subject to the same investor protections. Furthermore, cryptocurrency related products might not trade in the same way as other similar products that do not have cryptocurrency exposure, which may result in thinly traded or illiquid markets with inferior prices.
- Cryptocurrencies are not considered legal tender and a federal, state, and/or foreign government may restrict the use and exchange of all or certain cryptocurrencies, which may affect the value of the restricted cryptocurrency and related products.
- Since cryptocurrency exchanges are not subject to the same regulatory requirements or price protections that apply to more established markets, they may be more susceptible to fraud or manipulation or may be more volatile, which can impact the value of cryptocurrency related products or cause products that track the same underlying cryptocurrency to trade at disparate prices on different venues.
For more information see the SEC’s Investor Alert, FINRA’s Investor Alert, the CFTC’s Customer Advisory, and the NFA’s Investor Advisory.