Digital Asset Risk Disclosures

Digital assets are a speculative investment and involve a high degree of risk. Investors must have the financial ability, sophistication, experience, and willingness to bear the risks of such an investment, including the potential for a total loss of their investment.

Information provided by iTrustCapital does not constitute investment, tax or legal advice nor is it a solicitation of an offer to buy or sell any digital assets or security or to participate in any investment strategy. An investment in digital assets is not suitable or desirable for all investors.

Investing in digital assets has inherent risks including but not limited to:

The digital asset market is relatively new and lacks the same level of regulation seen in traditional financial markets. This lack of regulation can lead to increased risks, including a higher potential for fraud and market manipulation.
Digital assets may lose a substantial portion or all their value.
The legal and regulatory framework for digital assets is evolving. Changes in laws, regulations, or government policies may adversely impact the legal standing and financial viability of digital asset investments. This includes tax laws, securities regulations, and other financial rules.
Cryptocurrencies are not legal tender, are not backed by the government, and accounts and value balances are not subject to Federal Deposit Insurance Corporation or Securities Investor Protection Corporation Protections.
Transactions in digital assets may be irreversible and losses due to fraudulent or accidental transactions may not be recoverable.
Digital asset transactions may be deemed to be made when recorded on a public ledger, which is not necessarily the date or time that the customer initiates the transaction.
The value of digital assets may be derived from the continued willingness of market participants to exchange fiat currency for digital assets, which may result in the potential for permanent and total loss of value of digital assets if the market for digital assets disappears.
There is no assurance that a person who accepts cryptocurrencies as payment today will continue to do so in the future.
The volatility and unpredictability of the price of digital assets relative to fiat currency may result in a significant or total loss over a short period of time.
The nature of digital assets may lead to an increased risk of fraud or cyber-attack.
The nature of digital assets means that any technological difficulties experienced by third parties may prevent the access or use of your digital assets.

The above summary is not a complete list of the risks and other important disclosures involved in investing in digital assets. There may be additional risks that we have not foreseen or identified in our Terms of Use. You should carefully assess whether your financial standing and tolerance for risk are suitable for buying or selling digital assets.

Staking Risks

Staking Risks. Staking involves considerable risk. The risks summarized below are non-exhaustive and you should conduct your own due diligence on any particular Digital Asset before deciding whether to utilize the Staking Services in connection with that Digital Asset. iTrustCapital makes no recommendation whether to use the Staking Services, and it provides no investment or other advice in connection with your decision to use or not use the Staking Services. Rather, iTrustCapital merely provides the opportunity to use the Staking Services for a Supported Token. We recommend consulting a qualified investment, legal, or tax professional and that you conduct your own due diligence before making any investment decision including whether to participate in Staking Services and related transactions.

Market Risks. The risk that principal or overall returns could decrease or go negative based on potential decreases in the Staked Tokens asset's value over time, regardless of the APY for staking said Digital Asset. You should consider more than APY when determining which Digital Asset(s) and whether you should stake.

Slashing Risks. As provided above, the risk that Staked Tokens will be "Slashed," i.e., reduced, in accordance with network protocols for node or validator misbehavior, such as having appreciable downtime or "double signing." Depending on the Digital Asset and its protocol, staked Digital Assets may be Slashed if the nodes or validators they are attached to (A) is non-operational for a certain period of time ("downtime"), or (B) approves of, or "signs," two or more transactions for the same block ("double signing").

Liquidity Risks. The risk that you may be unable to sell, favorably or otherwise, the principal or staking rewards of certain Digital Assets that you previously decided to stake, either due to limited liquidity on exchanges, decreased market demand, or a number of other factors. Furthermore, certain Digital Assets currently eligible for the Staking Services cannot be unstaked until a future network development occurs. The timing of this and other network developments are uncertain and may never materialize, in which case a staked Digital Assets may never be unstaked and could remain illiquid, resulting in the inability to sell such Digital Assets.

Idiosyncratic Risk. While Digital Assets that are eligible to be staked share operational similarities, there are certain risks unique to some Digital Assets but not others. For example, Ethereum recently underwent several "forking" events (e.g., the Berlin and London hard forks) that created the Ethereum 2.0 network as part of its transition to a proof-of-stake system. Staked Ethereum will not (and may never) be available for withdrawal until after the Eth.2.0 merge occurs, if ever. You should review the features of each Digital Asset considered for the Staking Services prior to Enrollment.

Opportunity Costs. The risk that by utilizing the Staking Services you may receive less in Staking Rewards than you would if you ran your own validator node or used another third-party staking services because iTrustCapital or the Staking Services Provider may choose to keep a higher percentage of Staking Rewards and pass on lower returns than other staking service providers.

Lockup Risk. The risks that certain Digital Assets may require a warm up, cool down, or lock up period, or other Network Restriction as discussed herein, which may affect your ability to earn Staking Rewards or impact your ability to sell the Staked Tokens during advantageous market cycles or periods.

Rewards Risk. Staking Rewards are not guaranteed, and certain Digital Assets may not provide Staking Rewards immediately and certain node operators or validators may not pay out Staking Rewards regularly or periodically. Therefore, you will need to assess the risks associated with irregular Staking Rewards schedules, which are particular to each Digital Asset.

No Guarantee of Staking Services. Staking Services uptime is subject to the terms and conditions of the Staking Services Provider. iTrustCapital will employ reasonable measures to make Staking Services available, with the exception of scheduled maintenance and downtime which is done at iTrustCapital’s discretion, but iTrustCapital cannot guarantee uninterrupted or error-free operation of the Staking Services or that iTrustCapital will correct all defects or prevent third-party disruptions or unauthorized third-party access. In the event of such disruptions, any Staked Tokens might not generate Staked Rewards, and withdrawal of Staked Tokens or Enrollment of additional Supported Tokens for staking may not be available.

Regulatory Risk. The risk that iTrustCapital or the Staking Services Provider is able to provide staking services in connection with the iTrustCapital Platform may be curtailed by legislative or regulatory action. Furthermore, legislative and regulatory changes or actions at the state, federal or international level may adversely affect: (A) the use, transfer, and value of Staked Tokens; (B) the operations and profitability of the iTrustCapital Staking Services; (iii) the tax treatment of the rewards earned from Staking Services; and (iv) your ability to withdraw Staked Tokens in a timely manner or at all.

Tax Risk. The taxation of Digital Asset transactions is highly uncertain, particularly for retirement accounts. In particular, staking income may be viewed by the Internal Revenue Service (“IRS”) as taxable unrelated business taxable income (“UBTI”) for a retirement account, and the IRS could take a similar view as to net gains and other types of income from cryptocurrency transactions. PLEASE CONSULT A QUALIFIED LEGAL, TAX, OR INVESTMENT PROFESSIONAL WITH RESPECT TO THESE IMPORTANT ISSUES.