Nov. 24 – Residents across the state looking for investment opportunities are being warned about where to park their money.
The Oregon Division of Financial Regulation (DFR) urges Oregon investors to diversify their investments and educate themselves about the risks of investing in largely unregulated products like cryptocurrencies.
Some of these financial product offerings are registered and licensed with the DFR as money transmitters or securities offerings. The department has investigated several cryptocurrency companies and continues to monitor the market.
According to a broad online definition, cryptocurrency is virtual or digital money that comes in the form of tokens or coins.
Cryptocurrencies are digital assets that have no government backing. They are bought, used, stored and traded electronically, usually through digital currency exchanges. They can be exchanged for goods and services, transferred from person to person or held for investment purposes.
“It is important to understand the risks associated with cryptocurrencies or investment opportunities,” said TK Keen, administrator of the DFR. “No investment opportunity is risk-free, and you should always do your homework on where you send your money. This is especially true when it comes to cryptocurrency.”
The bankruptcy of FTX, the world’s third-largest cryptocurrency exchange, which saw nearly 1 million customers and investors suffer billions of dollars in losses, should serve as a wake-up call for anyone investing in cryptocurrency.
“Given what’s happening right now, investing in cryptocurrencies is extremely risky,” Keane said. “It’s important not to invest more than you can afford to lose or keep all your wealth in one bucket.”
Cryptocurrency accounts are generally not insured by the FDIC, which recently issued a fact sheet clarifying when an account is considered insured.
The DFR encourages Oregon residents to follow these tips when it comes to digital currencies and non-fungible tokens (NFTs), which are often attached to digital artwork, photos, or videos:
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Research these types of investments carefully. Many of these “investment opportunities” are speculative in nature. Before making a transaction, make sure you understand what you are buying, the value of the item being purchased, the reason for the valuation and how easy it is to sell the investment if you wish to withdraw your funds.
Use a digital currency exchange licensed with the state to transfer cryptocurrency to another. Oregon law requires companies that transfer digital currency from one person to another to be licensed as a money transmitter. Digital currency exchange companies that buy or sell cryptocurrency from their own holdings do not need to purchase a license.
Don’t spend money you don’t need. The volatility of the digital currency and NFT markets means you shouldn’t buy cryptocurrency with money needed for essential purposes like groceries, housing, and gas.
In an earlier recommendation in October, DFR warned of a number of online scams intended to provide “education” and “guidance” for investors in guidance systems.
“These systems make multiple misstatements about investments made through TikTok and Discord and their returns, which subsequently makes it difficult to track those misstatements and the individuals involved,” DFR said in a press release. “Investment offers are often aimed at people who have recently lost money investing in cryptocurrency or stocks.”
For more information about these platforms or if you believe you have been scammed, contact the Legal Department at 866-814-9710 (toll free).