Do you want to invest in crypto or in stocks? Here's what you need to know about the differences

Inflation is high, so the money in your bank account is steadily depreciating. But a friend of yours knows someone who has made tons of money from crypto. And in a YouTube commercial, an influencer says that he can live a luxurious life as a ‘digital nomad’ because he makes huge profits from day trading on the stock market. So maybe you also want to invest in cryptocurrencies or in shares. Then you need to know something about risks, opportunity distribution and legal protection, because they differ quite a bit on the stock exchange and in Bitcoin. You can read about that in this article.

Radar puts questions about stocks and cryptos to asset manager and stock market commentator Jim Tehupuring, and to Iris Newman, who shares finance tips online as a ‘finfluencer’

Long-term versus short-term returns

Tehupuring thinks investing in cryptos falls under speculation: making money quickly from a price increase. “If you invest in stocks, you’re investing in companies you have faith in and long-term growth,” he says. “If you want to make money very quickly, it may go well for a while, but in the end it often ends in tears.” Newman partly agrees, with the caveat that it is also possible to speculate with shares.

You are not legally protected if you invest in crypto

It is good to know that crypto companies are not supervised. For example, there are no laws at all for advertising about crypto, as there are for other financial products. There is also no control over who can make a crypto coin – Radar showed that by making its own ‘token’.

More importantly, crypto trading platforms are not monitored by a regulator, while the traditional exchange is monitored. Supervisors of the Netherlands Authority for the Financial Markets and De Nederlandsche Bank (DNB) deal with banks and stock brokers, among other things, not with crypto brokers.

Registration of crypto brokers

Some crypto brokers are registered with DNB. This does not mean that DNB supervises them, it just means that these companies have provided a list of basic data: they must explain to DNB who manages the company, how the company is managed and what the business model is. Stripe stocks ipo is found online. Many international crypto brokers do not even comply with this registration. Users of the popular trading platform Binance, for example, recently lost the option to deposit money with iDeal or with SEPA transfers because the company had no registration (Binance has now submitted a registration request to DNB).

Box 3: your shares and crypto coins with the tax return

You are obliged to declare all your assets on your tax return, in the so-called ‘Box 3’. Both stocks and cryptocurrencies fall into that category. However, stock brokers will provide you with an annual tax statement that you can use for your tax return. Often your shares and other classic investment products have already been entered in your tax return, because the Tax and Customs Administration has access to your portfolio. The Tax and Customs Administration cannot (yet) view your crypto assets, and crypto brokers often do not send you an annual statement. For example, Tehupuring says that his crypto broker sent him a message with the message: you must know what your cryptos are worth on January 1, and we will not make an overview for you, so make a screenshot of your crypto wallet yourself on January 1.

Joining as a beginner?

‘Fund investing’ is a good option for small investors, says Tehupuring. You do not buy individual shares (which can be very expensive), but you invest money in a kind of basket of shares through a bank or other financial institution. That way you can still participate in the stock market for small amounts, for example 50 euros per month. Newman advises against investing in crypto for beginners. “I’d start with regular equity investments,” she says, also pointing to fund investing as a good way to get in.