By Wiehann Olivier, CA (SA) and Partner at Mazars South Africa

While we wait for the experts to draw up a regulatory framework for crypto-assets, it’s crucial that you educate yourself on good practices for Virtual Asset Service Providers (VASPs).

Red flags

Here are 10 red flags to look out for when you’re evaluating a cryptocurrency investment or a platform for trading crypto-assets:

1. White papers or investment methodologies that are extremely difficult to understand and follow;
2. Complex and vague explanations of the investment opportunities;
3. Promises of guaranteed returns which seem unrealistic;
4. A countdown clock with a deadline not to miss a once-in-a-lifetime opportunity;
5. Phrases that link the generation of wealth to short timelines , such as “Your money should work for you.”;
6. Attractive pictures of luxury cars, beaches, etc;
7. Poorly built presentations asking you not to contact the company involved, but rather the person who sent you the presentation;
8. Testimonials on websites that create the illusion of credibility but cannot be verified;
9. Fictitious teams or employees who cannot be found on LinkedIn;
10. Income that is not predominantly generated by the growth of your investment, but from a referral fee.

If you are familiar with cryptocurrencies and you are or planning to invest in crypto-assets through a VASP, here are five tips to take note of:

1. Never give out your password.
2. Beware of phishing emails that require you to update information or log into a website through a link contained in the email.
3. Do your homework and look for a reputable and trustworthy service provider with a proven track record, such as Luno or Revix.
4. Do a Google search – as easy as that!
5. If you manage your own public and private key, follow best practice in ensuring that your private key is stored safely. Security is everything, whether you safeguard your own crypto or make use of a VASP.

This article first appeared in City Press.