HIGHER RISKS, HIGHER Profits
Systems like Chocolate Finance have a number of appealing features, mainly due to their promise of higher returns. However, higher profits usually come with higher risks. Customers may question the viability of such results when fiscal products offer yields that considerably exceed those of traditional banks.
The chocolate finance’s business model relied on user deposits being invested in bond funds, which are still usually safer than equities but also have interest rate and credit risk. Tie prices may drop as interest rates fluctuate, affecting the product’s liquidity.
Financial stress occurs if a surge in payments causes the bankruptcy of bonds at unfavorable costs.
Influencers with unnamed economic interests may aggressively promote platforms, leaving their followers prone to unanticipated losses, in the worst cases. This threat is best illustrated by the rapid rise and subsequent decline of the$ Republican memecoin, which US President Donald Trump has touted. Its price dropped to around US$ 10 since reaching its peak in January, reaching US$ 70.
Invest smartly
Consumers may develop critical thinking skills in order to understand the hype given the growing role of influencers in economic decision-making. Here are a few important factors:
First, consumers must be aware of the distinctions between platforms offering voluntary fund management and regulated financial institutions.
The Monetary Authority of Singapore ( MAS ) has approved Chocolate Finance as a fund manager, but it is not a bank. Lenders are regulated by the Singapore Deposit Insurance Corporation, subject to stricter cash needs, borrower security plans, and are regulated by a banking license.
For portfolio control activities, economic platforms are permitted to use a capital market services license. They operate with more mobility, but there are fewer protections for consumer funds.