Risks of Investing in Crypto-Assets

Crypto-assets can be highly volatile and involve risks that investors should understand before making a decision. These include market, technology, custody, counterparty, liquidity and regulatory risks.

Professional management can help identify, assess and monitor risks, but it cannot eliminate them. Investing in crypto-assets may result in a partial or total loss of capital.

High volatility

The value of crypto-assets can change substantially over short periods. Sharp price movements can be particularly difficult for investors with a short investment horizon and can increase the risks of frequent trading.

Belayer assesses each client’s investment horizon and capacity to bear losses before establishing an individual mandate. Portfolio positions are monitored and may be adjusted as market conditions and investment theses change. These measures do not prevent losses.

Fraud and Counterparty Risk

Fraudulent projects, misleading information, security breaches and failures by exchanges, issuers or other counterparties can cause losses. Regulation and licensing requirements provide a framework for certain activities, but they do not remove these risks or guarantee the safety of an investment.

Belayer assesses the assets, protocols and counterparties used in client portfolios and applies custody and access-control procedures. Losses may still occur despite these controls.

Regulatory and Legal Risk

The EU’s Markets in Crypto-Assets Regulation (MiCA) establishes rules for crypto-assets and crypto-asset service providers. Other laws and regulatory requirements may also apply, depending on the asset, service and jurisdiction. Rules and their interpretation can change, potentially affecting an asset’s availability, liquidity or use.

Belayer monitors applicable regulatory developments and reviews portfolio exposures against its licensed activities and internal requirements.

Technology and Custody Risk

Crypto-assets depend on digital wallets, private keys, blockchain networks and other technical infrastructure. Lost or compromised credentials, software vulnerabilities, transaction errors, network failures and incidents involving third-party providers may result in losses or delays. DeFi positions also involve risks associated with smart contracts and protocols.

Belayer uses custody, authorisation and access-control procedures for client assets. Such procedures reduce operational exposure but cannot eliminate technology or custody risk.

Risks Arising from Limited Experience

A lack of knowledge, time or experience can lead to costly decisions, including errors in selecting assets, using platforms, safeguarding access credentials or assessing liquidity and risk.

Belayer manages portfolios under individual mandates, supported by research, monitoring and reporting. Before entering into an agreement, we assess the client’s knowledge, experience, financial situation, objectives and capacity to bear losses. Professional management does not guarantee a positive investment result.