NASAA warns investors of risk in ICOs
Issues surrounding investments in cryptocurrencies remain a strong focus of securities regulators in Canada and the US.
There are more than 200 currently active investigations into Initial Coin Offerings (ICOs) and cryptocurrency-related investment products, the North American Securities Administrators Association (NASAA) said Tuesday.
The association’s ongoing “Operation Sweep” brings together securities regulators at state and provincial level across North America in a co-ordinated focus on cryptocurrencies.
Since its launch in May, the operation has resulted in 46 enforcement actions.
“State and provincial securities regulators are committing significant regulatory resources to protect investors from financial harm involving fraudulent ICOs and cryptocurrency-related investment products and also are raising awareness among industry participants of their regulatory responsibilities,” said NASAA President and Alabama Securities Commission Director Joseph P. Borg.
It's not always about fraud
While many investigations undertaken by securities regulators may involve fraud, many more are regulatory issues such as failure to register products correctly or other violations of securities legislation and rules.
Borg says that those offering cryptocurrency investments must realise they are not operating in a vacuum and are subject to the same laws as other investment providers.
He warned investors that due diligence should be at the heart of their investment decisions, even when ICOs or other cryptocurrency investments are correctly registered with regulators.
Borg also says that investors should be cautious if promoters claim their product is exempt from securities regulation but do not ask about their income, net worth or level of investing sophistication.
“Do your homework and contact your state or provincial securities regulator with any concerns before parting with your hard-earned money – afterwards may be too late,” he warned.
