83°F
weather icon Clear

Nevada official urges caution about investments involving cryptocurrencies

With cryptocurrencies continuing to attract headlines, Nevada Secretary of State Barbara Cegavske is reminding Nevada investors to be cautious about investments involving cryptocurrencies.

“Investors should do their research to truly understand the risks associated with investments in cryptocurrencies, as well as cryptocurrency futures contracts and other financial products where these virtual currencies are linked in some way to the underlying investment,” Cegavske said in a statement Jan. 5.

Cryptocurrencies are a medium of exchange that are created and stored electronically in the blockchain, a distributed public database that keeps a permanent record of digital transactions.

Current common cryptocurrencies include Bitcoin, Ethereum and Litecoin, her office said in the statement.

“Unlike traditional currency, these alternatives have no physical form and typically are not backed by tangible assets,” the statement said. “They are not insured or controlled by a central bank or other governmental authority, cannot always be exchanged for other commodities, and are subject to little or no regulation.”

A survey of state and provincial securities regulators by the North American Securities Administrators Association, of which the Nevada Secretary of State is a member, shows 94 percent believe there is a “high risk of fraud” involving cryptocurrencies.

Regulators also were unanimous in their view that more regulation is needed for cryptocurrency to provide greater investor protection.

“The price fluctuations and current speculation in cryptocurrency-related investments may lure Nevadans to invest even though they may not fully understand the potential consequences,” Diana Foley, deputy secretary for securities, said.

“Cryptocurrencies and investments tied to them are often high-risk products with an unproven track record and high price volatility, making them unsuitable for certain investors saving for retirement,” Foley said.

The Nevada Secretary of State’s Office also said that:

■ Last month,the North American Securities Administrators Association identified Initial Coin Offerings (ICOs) and cryptocurrency-related investment products as emerging investor threats for 2018.

■ Unlike an Initial Public Offering (IPO) when a company sells stocks in order to raise capital, an ICO sells “tokens” in order to fund a project, usually related to the blockchain.

■ The token likely has no value at the time of purchase. “Some tokens constitute, or may be exchangeable for, a new cryptocurrency to be launched by the project, while others entitle investors to a discount, or early rights to a product or service proposed to be offered by the project.”

The North American Securities Administrators Association offers a short animated video, which can be found at https://vimeo.com/239995680, to help investors understand the risks associated with Initial Coin Offerings and cryptocurrencies.

MOST READ
THE LATEST
Calvada fountain sparks contention

The water board was lambasted by residents angered at the idea of replacing something that has been a part of the community for decades.

Blood donations needed amid back-to-back hurricanes

The American Red Cross of Southern Nevada is calling on locals to lend a hand in aiding their fellow Americans as they recover from the storms.

Gold exploration project continues in Tonopah

The work program will include completing approximately 15 to 20 drill holes before year’s end.

It’s Fire Prevention Week: Check smoke alarms

“One of the simplest ways to protect your home and family is to have working smoke alarms,” said Rachel Flanigan, Executive Director of the American Red Cross Southern Nevada Chapter.

Senior Menus

The menu (subject to change) for the week of October 14 – October 18.