SoFi puts up a warning ‘you could lose all your money’ on every crypto trade, says CEO
- SoFi warns every crypto customer on its platform to be wary of volatile digital currencies before buying, CEO Anthony Noto told CNBC on Thursday.
- “Every time someone enters a buy action, we have a warning that says it’s an unproven asset, it’s highly volatile, and you can lose all of your money,” he said.
- The new SEC chairman told CNBC in May that more investor protections are needed surrounding bitcoin and other crypto assets.
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Online finance company SoFi warns every crypto customer on its platform to be wary of volatile digital currencies before buying, CEO Anthony Noto told CNBC on Thursday.
"We take a very structured and serious approach to consumer protection. We ensure that consumers are educated. We focus on suitability," Noto said on "Squawk Box." "Every time someone enters a buy action, we have a warning that says it's an unproven asset, it's highly volatile, and you can lose all of your money." He joined CNBC's Julia Boorstin from Sun Valley, Idaho, where tech and media CEOs are back for an influential annual conference after last year's cancellation due to Covid.
The new head of the Securities and Exchange Commission told CNBC back in May that more investor protections are needed surrounding bitcoin and other crypto assets. SEC Chairman Gary Gensler said at the time that regulation was needed to prevent fraud and other issues. Gensler previously taught classes about blockchain and other financial technology at the Massachusetts Institute of Technology.
SoFi, short for Social Finance, is one of many free trading platforms, including Robinhood, that are increasingly prying open Wall Street and giant investment firms. The fintech company, which was created in 2011 with a focus on student loan refinancing, went public on June 1 following a SPAC merger with blank-check company Social Capital Hedosophia Corp V.
Noto also said SoFi has focused on providing its members with awareness of payment for order flow, the compensation a broker gets for routing trades for execution.
Customers are "getting the bulk of the vast majority of that price improvement from payment for order flow," Noto said. "It's a widely used piece of the financial models that allow for fractional shares, that allows for paying no commissions. But it needs to be adequately disclosed. It's a very, very small percentage of our revenue."
The company, which ranked No. 8 on the 2020 CNBC Disruptor 50 list, is also seeing a "strong appetite" in investing coupled with broad-based participation across investments, according to Noto.
The significant growth in new accounts and activity accelerated in the beginning of the pandemic and has remained relatively strong since, the CEO noted, saying that increased participation in markets is being driven by individual interest in long-term financial health.
"I think we're seeing a generation of people that realize the importance of investing, and as an industry, we've given access to investing to more people. And so you see more 20 to 30 year olds participating in the markets, and I think that will continue," Noto said.
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