By Graphicsclz (Own work) [CC BY-SA 3.0] via Wikimedia Commons
The American states of Alaska and Idaho have both announced warnings regarding investments that involve cryptocurrencies.
On Thursday, the Department of Finance of Idaho warned its people to deal with cryptocurrency investments with caution. It stated that a survey that was conducted by the North American Securities Administrators Association (NASAA) has revealed that 94 percent of state and provincial securities regulators consider that bitcoin and other digital currencies have a “high risk of fraud.”
The director of the Idaho Department of Finance, Gavin Gee, said that unsuspecting investors easily get tempted by the wild price fluctuations and speculation that have surrounded cryptocurrencies recently and rush into investments that they do not fully understand.
Gee stated: “Cryptocurrencies and investments tied to them are high-risk products with an unproven track record and high price volatility. Combined with a high risk of fraud, investing in cryptocurrencies is not for the faint of heart.”
The note states that cryptocurrencies are susceptible to cybersecurity hacks or breaches and the high volatility of such investments makes them not suitable in sizable amounts for investors.
The Department of Finance also warned investors to keep an eye out for obvious red flags of investment fraud, which include unlicensed sellers, unsolicited offers, and guarantees of high returns.
The state of Alaska has also issued a statement that urges the public to see cryptocurrency investments with caution.
A local news media report said that the director of the state’s Division of Banking and Securities, Kevin Anselm, stated that cryptocurrencies “aren’t a typical investment.” She stressed that people must understand the risks of investments, such as fraud or hacks, and what the offerer is offering in return.
Anselm said that there had been an increase in reports of Alaskans being offered to buy new cryptocurrencies.