Oregon’s Division of Financial Regulation warns Oregonians to exercise caution when investing in cryptocurrencies, non-fungible tokens, or other new or volatile commodities.
According to a broad online definition, a cryptocurrency is virtual or digital money that takes the form of tokens or coins.
Cryptocurrencies are digital assets that have no government backing. They are typically purchased, used, stored, and traded electronically through digital currency exchanges. They can be exchanged for goods and services, transferred from one person to another, or held for investment purposes.
A non-fungible token – or NFT – is a unique unit of data that is not interchangeable and is stored on a blockchain. They are often linked to digital artwork, photos and videos.
There are nearly 10,000 active cryptocurrencies and they and NFTs are growing in popularity. The regulation of these new types of assets is still evolving. Although there are often promises of big returns, consumers often lose money when investing in them.
In fact, earlier this month, the North American Securities Administrators Association (NASAA) released its annual list of top threats to investors, and investments related to cryptocurrencies and digital assets topped the list.
“Scams promising big returns on cryptocurrencies and NFTs are flooding the internet,” said TK Keen, administrator of the Oregon Division of Financial Regulation. “Investors wishing to buy cryptocurrencies and NFTs should do their homework to ensure they fully understand these investments and their risks before getting involved.”
The Oregon Division of Financial Regulation encourages Oregonians to follow these specific recommendations before investing in cryptocurrency or NFTs:
- Research these types of investments thoroughly. Many of these “investment opportunities” are speculative in nature. Before committing to a transaction, make sure you fully understand what you are buying, the value of the item purchased, the reason for the valuation and how easily it is possible to sell the investment if you wish to withdraw your money.
- Use a state-licensed digital currency exchange to transmit cryptocurrency to someone else. Oregon law requires companies that transfer digital currency from one person to another to be authorized to transmit funds. Digital currency exchange companies that buy or sell cryptocurrencies from their own inventories are not required to be licensed.
- Don’t spend the money you need. The volatility of the digital currency and NFT markets means that you should not buy cryptocurrency with money needed for essential purposes such as food, shelter, and gasoline.
Consumers with questions about these unregulated assets can call the division’s attorneys toll-free at 866-814-9710.