Always Use Caution When Investing in Cryptocurrency

Monday, January 30, 2023 | 02:03pm

Always Use Caution When Investing in Cryptocurrency

Technology has made investing easier than ever before, but it has also increased the risks that investors face.

For several years now, cryptocurrency has been a continuously trending topic of conversation among financial regulators, media, professional investors, and everyday Americans. Both supporters and critics alike have strong feelings about crypto as an investment platform.

For readers who may not know, a cryptocurrency is an unregulated, digital-only currency that is not backed by a bank or a government and has no physical existence , unlike traditional currency.

While cryptocurrency has grown in popularity among investors of all ages, several cryptocurrency exchanges have filed bankruptcy in recent months, prompting a slew of criminal, regulatory, and Congressional investigations.

All investments come with a risk, but cryptocurrencies and other digital currencies come with their own specific risks since they are largely unregulated and do not exist in the real world. Tennesseans who are thinking of investing in cryptocurrency or digital investment types should remember that a virtual investment carries a physical, real-world risk. 

Tennessee investors can protect themselves when considering investing in digital offerings by following these simple guidelines:

  • Understand all associated risks and make sure you are comfortable with them -- including the possibility that you might lose your entire investment.
  • Verify that the person or entity offering the investment is registered with one or more securities regulators. Visit TDCI’s Securities division online here.
  • Avoid discussing investments or sharing personal or account information with avatars, or digital representations of users that can take on any appearance or personal attribute. Fraudsters may try to leverage shared interests, ideas, and goals to build trust and convince investors to invest in phony investment schemes.
  • Steer clear of unsolicited online investment advice.
  • Do not directly transfer cryptocurrency to unknown individuals or entities as scammers can easily impersonate investments and/or business opportunities in an attempt to gain access to your digital wallet and/or authentication credentials.
  • Be wary of misinformation including fake news and online celebrity gossip as scammers can easily write fake online articles and social media posts that create buzz by falsely stating a celebrity or public figure is involved in technology investment.

Before making an investment, investors should objectively consider all the information available and contact TDCI’s Securities team if there are any concerns with the validity of an investment offer.

TDCI’s Securities Team can be contacted by phone at (615) 741-2947 or visit us online.

To check the status of an investment adviser or broker dealer, visit Brokercheck.

Elizabeth Bowling serves as the Assistant Commissioner overseeing the Securities Division of the Tennessee Department of Commerce and Insurance.