Many investors were surprised by the recent collapse of FTX, as customers wait for answers about an estimated $1 billion to $2 billion of missing funds.
The future of the company and investigations into the vanishing assets are in limbo as FTX enters bankruptcy protection.
Jon Ulin, CEO of Ulin & Co. Wealth Management, said that the FTX collapse reminded him that there is no such thing as a free lunch.
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Ulin said that you should invest what you are willing to lose 100%, like in Vegas.
There are other lessons to be learned from FTX.
About half of Kevin Lum's clients hold some form of virtual currency.
He doesn't think clients need to reduce their exposure, but they need to know where digital currency is held and the risks of keeping assets there
The collapse of FTX will be good for traditional finance companies like Fidelity, because they have a certain level of trust.
Fidelity Investments is planning to launch a commission-free product that will allow investors to buy and sell virtual currency.
The collapse of FTX has renewed interest in taking digital currency offline, making it less vulnerable to hacks. Assets are less liquid as a result of the move.
Experts say a lot of a single holding can be risky.
George Gagliardi is the founder of Coromandel Wealth Management.
The crash of the cryptocurrencies this year was a painful lesson for people who had high allocations to them.
The [FTX] collapse should be a lesson that any individual company — be it a crypto exchange or more traditional business — can go bankrupt in times of distress.
Since hitting an all-time high of $68,000 in November 2021, the price of the digital currency has plummeted by more than 75%.
Kevin Brady, a vice president of Wealthspire Advisors in New York, said that the collapse of the FTX should be a lesson for other companies.
5% of a single asset starts to be material and 10% is very concentrated. Some investors may be able to take advantage of some circumstances.
According to Ulin of Ulin & Co., even if a financial asset is speculative in nature, it can still play a role in a diversified portfolio.
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The debate about how to classify and regulate cryptocurrencies has been going on for a long time.
In June, Cynthia Lummis, R-Wyo., and Kirsten Gillibrand, D-N.Y., introduced a bill to create a regulatory structure for digital currency, defining the majority of assets as commodities.
According to experts, the FTX meltdown may accelerate these discussions. The founder of Delancey Wealth Management in Washington believes that there will be regulations. The bad business models will be gone.
A bipartisan hearing will be held in December to investigate FTX's collapse.
The chair of the Securities and Exchange Commission has been pushing for tighter rules. He told CNBC that investors needed better protection.
It is recommended that you download your transaction history periodically.
Andrew Gordon is a tax attorney and president of Gordon Law Group. You will need records to file your return if the exchange closes.
Gordon said that few people thought FTX would be facing this.
Tracking throughout the year will make it easier to trim your bill with strategies such as tax loss harvesting. He said it would put you in a better position when tax time came.
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