Digital Asset Risk Disclosure
Digital assets are complex, volatile, and carry a meaningful risk of loss. This page explains the principal risks of investing in digital assets through Northlight Capital, in plain language — not as fine print.
This disclosure is intended to help you understand the risks associated with digital assets before you invest. It does not describe every possible risk, and it is not a substitute for independent legal, tax, or financial advice. Read it carefully, and ask us any questions before proceeding.
High volatility
Digital asset prices can move sharply and unpredictably over short periods of time, in ways that are often more extreme than traditional asset classes such as equities or bonds. A position that appears well-sized today can become significantly more or less exposed within days or even hours.
Potential loss of capital
You could lose some or all of the capital you invest in digital assets, including in scenarios where the broader market performs well. No investment strategy, risk control, or diversification approach eliminates this risk.
Liquidity risk
Some digital assets can become difficult to buy or sell at a reasonable price during periods of market stress, low trading volume, or exchange disruption. This can affect our ability to enter, adjust, or exit a position on the timeline you might expect.
Market risk
Digital asset markets are influenced by factors that can be harder to predict or analyze than in traditional markets, including shifting investor sentiment, evolving regulation, and the actions of a relatively concentrated set of large holders.
Technology and protocol risk
Digital assets rely on underlying software, networks, and protocols that can contain bugs, be subject to forks or upgrades, or otherwise behave in unexpected ways. Technical failures or vulnerabilities at the protocol level can affect the value or functionality of an asset.
Cybersecurity risk
Digital asset infrastructure — including exchanges, custodians, wallets, and related service providers — can be targeted by theft, hacking, or fraud. A security incident affecting infrastructure used to hold or transact in your assets could result in loss.
Regulatory uncertainty
The regulatory treatment of digital assets is still developing and varies by jurisdiction. Future laws, regulations, or enforcement actions could affect the legality, value, or transferability of digital assets, or the way Northlight Capital is able to operate.
Counterparty and custody risk
Investing in digital assets typically involves relying on third parties — including exchanges, trading counterparties, and custodians — to hold assets or complete transactions. The failure, insolvency, or misconduct of any of these parties could result in loss, independent of the performance of the underlying asset. [CUSTODIAN NAME].
Stablecoin risk
Stablecoins are designed to maintain a stable value, typically relative to a fiat currency, but are not risk-free. A stablecoin can lose its peg, and its value depends on the adequacy and quality of its reserves, the soundness of its issuer, and the mechanisms used to maintain stability — all of which can fail.
Tax considerations
Digital asset transactions can have tax consequences that vary by jurisdiction and individual circumstances. Northlight Capital does not provide tax advice. You should consult a qualified tax professional regarding the tax treatment of your digital asset holdings and transactions.
No guarantee of profit
Nothing on this platform — including illustrative performance figures, historical pricing, or portfolio examples — should be understood as a projection, prediction, or guarantee of future results. Past performance of any asset is not indicative of future performance.
Related reading: our Digital Asset Disclosure and Investment Approach pages.