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Warning for virtual currency investors

Posted at 11:15 AM, Jan 04, 2018
and last updated 2018-01-04 19:16:12-05

The Arizona Corporation Commission wants investors to understand the risks associated with virtual currency.

Virtual currency is an electronic medium of exchange including crypto-currencies like Bitcoin, Ethereum, and Litecoin. While these currencies can be a fair and legal investment, there are some risks to consider.  The Corporation Commission urges investors to avoid investing more than they can afford to lose. 

Some other concerns investors should consider:

  • Virtual currency is subject to minimal regulation, susceptible to cyber-attacks and there may be no recourse if the virtual currency disappear.
  • Virtual currency accounts are not insured by the Federal Deposit Insurance Corporation (FDIC).
  • Investments tied to virtual currency may be unsuitable for most investors due to their volatility.
  • Investors will have to rely on unregulated companies and may be more susceptible to fraud and theft than regulated financial institutions.
  • Crypto-currency owners may experience difficulty in liquidating their investments or transferring them back into cash.

As with any other type of investment you should be cautious if a company guarantees returns, it sounds too good to be true, or you are pressured to act quickly. Also, always be aware that your investment can be lost.