Today, Jan. 4, the North American Securities Administrators Association (NASAA) released a warning for Main Street investors regarding the risks associated with cryptocurrencies and Initial Coin Offerings (ICOs).
The NASAA statement encouraged investors to look “beyond the hype” when considering cryptocurrencies and their derivatives, in order to better understand the associated risks.
Joseph P. Borg, NASAA President and Director of the Alabama Securities Commission, was quoted in the statement saying:
“Investors should go beyond the headlines and hype to understand the risks associated with investments in cryptocurrencies, as well as cryptocurrency futures contracts and other financial products where these virtual currencies are linked in some way to the underlying investment.”
Borg also noted in the statement that the volatile nature of the cryptocurrency market attracts new investors who are generally not well-informed about the nature of the investments they are making, stating:
“The recent wild price fluctuations and speculation in cryptocurrency-related investments can easily tempt unsuspecting investors to rush into an investment they may not fully understand.”
Common concerns and risks
The NASAA statement includes a list of common concerns associated with cryptocurrencies and warnings of high potential for fraud when investing in them…