CFTC warns people when purchasing virtual currencies 

The Commodity Futures Trading Commission (CFTC) issued a Customer Advisory warning customers to use caution and do extensive research before purchasing virtual coins or tokens, including those that are self-described as “utility coins,” or “consumption coins.” This is the fourth advisory about virtual currencies the CFTC has issued to give customers a greater understanding of virtual currencies.

“This advisory is part of the CFTC’s education and outreach efforts to help educate and inform market participants, who, given the pace of technology-driven change, will increasingly come in contact with new financial products and services,” said Erica Elliott Richardson, Director of the Office of Public Affairs and Office of Customer Education and Outreach. “The CFTC’s Office of Customer Education and Outreach closely coordinates with LabCFTC in order to keep pace with developments in the markets the CFTC regulates, and we look forward to staying ahead-of-the-curve in providing customers the information they need to protect themselves against fraud or manipulation in the marketplace.”

The advisory, titled “Use Caution When Buying Digital Coins or Tokens,” warns customers to view any promises or guarantees of future value as a “red flag.” Since this market is still very new, there is no commonly accepted standard to assigning a value on a particular virtual coin or token. This is an important reason to beware of coins or tokens sold today with the claim that they can buy goods, services, or platform access in the future. Also, businesses that are still in the proposal stage may use funds from coin sales to start or grow their ventures. The advisory provides important factors for customers to weigh that could impact the current or future value of a coin or token.

Protect Yourself: Do Your Research

Above all, the advisory emphasizes research. A customer’s best protection is to thoroughly research both the digital coins or tokens and the individuals, entities and affiliates who are offering the products. If information about the product offeror is not easily and readily available, the customer should be wary because purchasing these products can be considerably risky.

Read the full warning HERE

Source: CFTC – CFTC Issues Customer Advisory on Digital Tokens

Read also: EU released a report on Virtual Currencies and their future

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