Over the last month and a half we have witnessed the cryptocurrency market dwindle, losing more than half its total market cap. Seasoned investors have seen large unrealised gains shrink considerably and many newbies, as well as potential new investors, have retreated to a position of scepticism. Despite all this, it is likely that many punters have still made good money from their crypto investments and are now (or have been for months already) raving about the benefits to friends and family. It is also very likely that some of these friends or family members will want to get a slice of the crypto pie, and ask if you can invest for them or tell them what to buy. Sure, you may have made a considerable amount of money in the market and feel quite confident about your new found investment skills. For many that bought crypto early on in the game, however, it wasn’t hard to find a rocket-ship heading to the moon; if you could hold on. 2017 saw many cryptocurrencies appreciate by tens or hundreds of times their value. As the market matures and growth patterns change, many self-proclaimed crypto experts will undoubtedly make fatal errors. It’s always hard to see your investment disappear, but not as hard as having to tell someone else that they have lost money. Even if you made it clear that you weren’t responsible for the risk they were taking on, they will always somewhat see it as you losing their money or giving crummy advice.
Although cryptocurrency is not well regulated yet, it is important to remember that only accredited advisors should be offering financial advice in the marketplace. As long as everybody is making good money, it is unlikely that any of the people you invest for will complain. If the market heads south, however, and you lose lots of someone else’s funds, this may well change. Even if you weren’t profiting from your advice or actions, this will not help that much if some disgruntled investor makes a complaint and you are held responsible for the losses. Many people are likely just investing for friends or family, and might argue that they know none of the parties involved would take legal action. Even if you strongly believe this to be the case, you never really know, and even if you aren’t held legally responsible you may well burn friendships and destroy relationships as bitterness and resentment take over. If you really want to become an advisor, trade other people’s funds, or invest for other people, then it is imperative that you do your research and find out exactly what is required of you by law in your area and the best ways to go about it.