SEC Issues Warning on Cryptocurrencies

On Jan. 4, 2018, the chairman of the Securities and Exchange Commission and the Commodity Futures Trading Commission issued statements warning of the risks of cryptocurrencies. Their statement highlighted important issues and concerns related to cryptocurrencies, initial coin offerings (ICO) and other cryptocurrency related investment products. 

Cryptocurrencies, while touted as replacements for traditional currencies, lack many important characteristics of traditional currencies, including sovereign backing and responsibility, and now are being promoted more as investment opportunities than efficient mediums for exchange. Investors should make certain they understand both the benefits and risks of what they are investing in.

Here are several things to keep in mind before investing: 

• Cryptocurrency is not a guaranteed way to get rich quick. Be wary of schemes that promise high returns with no risk.
• For now, cryptocurrency is subject to minimal regulatory oversight and may be susceptible to breaches or hacks.
• Many fraudulent websites are taking advantage of the emerging cryptocurrency market by promoting ads online. Be cautious of unsolicited sales pitches.
• The high volatility of the crypto market makes it unstable for most investors, particularly those planning for retirement.

As with all investing opportunities, do your own research before making your investment, be speculative of your sources, and do not expect to be rich overnight.