TDCI’s Securities Division Issues Investor Advisor Alert Regarding Decentralized Finance
NASHVILLE – As part of its ongoing effort to raise investor awareness, the Tennessee Department of Commerce and Insurance’s (TDCI) Securities Division has issued an investor advisory alert regarding Decentralized Finance (DeFi), a relatively new blockchain-based set of financial services gaining popularity and acceptance. The advisory explains what DeFi is, the technology behind it, how DeFi lending works, as well as potential risks for investors and how consumers can avoid becoming a scam victim.
The growing popularity of cryptocurrencies is one of the main drivers behind the development of alternative banking and business opportunities that may rely on DeFi models.
“Decentralized Finance is an emerging technology, and it is important for investors to understand how DeFi works compared to traditional lending platforms,” said TDCI Assistant Commissioner of Securities Division Elizabeth Bowling. “These alternative financial services providers distinguish themselves from mainstream companies by offering lending, banking, and investing options that are decentralized or not dependent on traditional financial markets. Because DeFi is an emerging technology, the risks differ from those in traditional markets.”
Before making any financial decisions, the Securities Division recommends that consumers ask questions and conduct thorough research before investing.
Consumers who have questions should contact the Securities Division at tn.gov/securities or 800-863-9117 for more information.