The securities commissioner of the U.S. state of Kansas has issued a warning on the risks of cryptocurrency and ICO investments.
On Jan. 25, the Office of Securities Commissioner – a division of the Kansas Insurance Department – issued a statement to the public that investment in cryptocurrencies, including initial coin offerings (ICOs) and futures tied to digital currencies, are not insured by the government.
As such, the commissioner warns investors to be cautious regarding investment pitfalls.
John Wine, the state’s securities commissioner, said:
“Investors should go beyond the headlines and hype to 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.”
In addition, the State Insurance Department highlights that projects that give promises of high return, make unsolicited offers or pressure investors, are “red flags” of fraudulent schemes that investors should be aware of.
The statement, although not entirely surprising, once more signals that regulators in the U.S., at both state and federal levels, are paying closer attention to cryptocurrency activities, especially those that may be considered as issuing securities under disguise of token sales.
Just last week, the chiefs of the U.S. Securities and Exchange Commission and the Commodity and Futures Trade Commission (CFTC) said through an op-ed article that federal regulators are increasing their resources and efforts in scrutinizing cryptocurrencies.
At law enforcement level, in addition to three recent lawsuits brought by the CFTC against cryptocurrency operators, state level government bodies such as Texas State Securities Board and Department of Banking have recently given cease-and-desist orders to initial coin offerings and cryptocurrency banking services, citing the violation of financial regulations.
Kansas State Capitol image via Shutterstock