Just weeks after the debut of bitcoin futures in the U.S. and as exchange traded funds issuers are ramping up efforts to launch funds based on the digital currency, the Securities and Exchange Commission (SEC) is warning investors about cryptocurrencies and related investments.
In a public statement released Thursday, the SEC praised the North American Securities Administrators Association (NASAA) for encouraging investors to be cautious with cryptocurrencies.
“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,” said Joseph P. Borg, NASAA President and Director of the Alabama Securities Commission.
Other well-known digital currencies include ethereum, litecoin and ripple.
“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,” according to the NASAA.