State advises residents to be cautious about cryptocurrency

(NOVEMBER 25, 2022) The Oregon Division of Financial Regulation (DFR) reminds Oregon investors to learn about the risks in investing in largely unregulated products such as cryptocurrency.

“It is important to know the risks involved with cryptocurrency or any investment opportunities,” said TK Keen, administrator for DFR. “No investment opportunities are risk free, and you should always do your homework on where you are sending your money. This is especially true when cryptocurrency is involved.”

FTX was the third largest cryptocurrency exchange in the world. It recently went bankrupt. According to Cambridge Learner's Dictionary, bankrupt is when a company is unable to continue in business because it cannot pay its debts. The FTX bankruptcy left approximately 1 million customers and investors facing total losses in the billions of dollars.

The DFR says this should serve as a warning to anyone investing in cryptocurrency.

“Investing in cryptocurrency is extremely risky given what’s going on right now,” Keen said. “It’s important to not invest more than you can afford to lose or put all of your assets in one bucket.”

Cryptocurrency accounts are not generally protected by the government.

DFR encourages Oregonians to follow these tips when it comes to digital currency and nonfungible tokens (NFTs), which are often linked to digital works of art, photos, or videos:

• • • Carefully research these types of investments. Many of these “investment opportunities” are not secure. Before engaging in a transaction, make sure that you understand what you are purchasing, the value of the item purchased, the reason for the valuation, and how easy it is to sell the investment if you want to get out your money.
      

    • Use a digital currency exchange that is licensed with the state to transmit cryptocurrency to someone else. Oregon law requires companies that transfer digital currency from one person to another to be licensed as money transmitters. Digital currency exchange companies that purchase or sell cryptocurrency from their own inventories are not required to be licensed.
      

    • Do not spend money you need. The volatility of the digital currency and NFT markets means that you should not purchase cryptocurrency with money that is needed for essential purposes such as food, housing, and gas.