Online financial company SoFi warns crypto customers to beware of volatile digital currencies before making any purchase on its platform, CEO Anthony Noto told CNBC on Thursday.
“We have a very structured and serious approach to consumer protection. We make sure that consumers are educated. We focus on suitability, ”Noto said on“ Squawk Box ”. “Every time someone takes part in a buying action, we get a warning stating that it is an unproven asset that is very volatile and you could lose all of your money.”
Noto joined Julia Boorstin at CNBC in Sun Valley, Idaho, where technology and media CEOs are returning to an influential annual conference after being canceled last year due to Covid.
The new chairman of the Securities and Exchange Commission, Gary Gensler, told CNBC in May that more investor protection around Bitcoin and other crypto assets was needed. Gensler said at the time that regulation was needed to prevent fraud and other problems. Previously, he taught courses on blockchain and other financial technologies at the Massachusetts Institute of Technology.
SoFi, short for Social Finance, is one of many free trading platforms, including Robinhood, that are increasingly leveraging open Wall Street and huge investment firms. The fintech company, founded in 2011 with a focus on the refinancing of student loans, went public on June 1st after a SPAC merger with the blank check company Social Capital Hedosophia Corp V.
Noto also said SoFi was focused on making its members aware of order flow payment, the compensation a broker receives for forwarding trades for execution.
Customers “get most of the price improvement by paying for the flow of orders,” Noto said. “It’s a common part of financial models that allows fractions of a share that doesn’t allow commissions to be paid. But it needs to be adequately disclosed. It’s a very, very small percentage of our earnings.”
The company, which ranks 8th on the CNBC Disruptor 50 list for 2020, also sees a “strong appetite” for investment combined with broad participation in all investments, according to Noto.
The significant growth in new accounts and activity accelerated at the beginning of the pandemic and has remained relatively strong since, the CEO noted, saying that increasing participation in the markets is being driven by individual interest in long-term financial health.
“I think we are seeing a generation of people who are realizing the importance of investing, and as an industry we have more people investing allowing the markets and I think that will continue,” Noto said.