A staggeringly high number of market trading watchdogs associate digital currencies with criminal activity, according to research by the North American Securities Administrators Association (NASAA).
NASAA said its survey of state and provincial securities regulators shows that 94% of them believe there is a “high risk of fraud” involving cryptocurrencies.
Regulators were also unanimous in their view that more regulation is needed for cryptocurrency to provide greater investor protection, NASAA added, highlighting ‘red flags’ of investment fraud, which include terms such as ‘guaranteed’ high investment returns.
“There is no such thing as guaranteed investment returns, and there is no guarantee that the cryptocurrency will increase in value. Be wary of anyone who promises a high rate of return with little or no risk,” it said.
The organisation’s remark’s are in tune with regulators in other parts of the world, including Europe and Asia, that have issued warnings on investing in the cryptocurrency market.
In the United States, the Securities and Exchange Commission (SEC) commended NASAA for its warning.
“The SEC and state securities regulators are pursuing violations [of law], but we again caution you that, if you lose money, there is a substantial risk that our efforts will not result in a recovery of your investment,” the SEC said.
“We encourage investors to read NASAA’s release and particularly to keep in mind the common red flags of investment fraud.”