New research from the Ontario Securities Commission (OSC) finds that hundreds of thousands of investors in Ontario own cryptoassets or have participated in initial coin offerings (ICOs) despite having a relatively poor understanding of the emerging asset class.

The research was included in a new report released on Thursday detailing the results of market research commissioned by the OSC’s Investor Office into investor exposure to cryptoassets.

The report, which highlights a variety of investor protection concerns in the sector, reveals that 5% of Ontarians, or approximately 500,000 investors, currently own crypto assets and that 1.5% of Ontario residents, approximately 170,000 investors, say that they have participated in an ICO.

The top reason among investors for buying into cryptoassets was interest in new technologies, which was cited by 46% of those surveyed for the OSC report; this was followed by speculation, cited by 42%.

Although most investors are risking relatively small amounts — half of survey participants reported investing less than $1,000 and just 9% reported investing more than $10,000 — the report indicates that the cryptoasset sector raises several investor protection concerns.

Specifically, the report points to concerns arising around valuation, volatility, liquidity, custody and transparency. The OSC also states that its survey found that 20% of investors report problems withdrawing money from their accounts; 16% have had problems transferring money; and 15% said they didn’t understand the fees charged on their investments.

“The significant number of cryptoasset owners who have experienced issues using cryptoasset trading platforms supports securities regulatory authorities’ continued focus on these platforms,” the report says. “The OSC and other [Canadian Securities Administrators] members are collecting information on a number of trading platforms operating in Canada and their compliance with securities laws.”

Moreover, investor knowledge about the sector appears relatively weak. The survey found that only 3% of survey participants managed to identify six true/false statements about cryptoassets correctly and just 34% got the majority of them correct. In addition, many didn’t understand the regulatory status of cryptoassets.

“Confusion among Ontarians at large as well as cryptoasset owners as to whether ICOs are regulated is also of significant concern,” the report notes. “The OSC will continue to be proactive in reminding Ontarians of its role in regulating ICOs that constitute securities offerings.”

“It’s important that investors understand the potential risks of purchasing a product they don’t fully understand,” said Tyler Fleming, director of the OSC’s Investor Office. “We want to remind Ontarians to ask questions and read disclosure documents carefully to know what they are investing in.”

The report is based on an online survey with 2,667 Ontario investors, carried out between March 14 and 22, by Innovative Research Group.