Cryptocurrencies are increasing in value on the stock market, making them increasingly interesting to Tennessee consumers. (Fabian Figeredo/flickr)
The interest is enough to prompt the Tennessee Department of Commerce and Insurance to issue a message of caution to people who may be tempted to invest.
“It’s unregulated, there is no real backing for cryptocurrency – there’s no bank, there’s no guarantee,” said Kevin Walters, communications director with the department. “So at this point, what we’re doing is just trying to help people understand the risks associated with them.”
Cryptocurrencies are not insured by a central bank or government authority. They cannot be exchanged for other commodities.
Walters warned consumers to beware of promises of high rates of return and unsolicited offers. A recent survey by the North American Securities Administrators Association found that 94 percent of members believe there is a “high risk of fraud” involving the electronic currency.
Walters said the state has had no reports of anyone being scammed so far. But when it does happen, there’s not much recourse.
“If someone were scammed in a cryptocurrency scam, there wouldn’t be anything that we could do about it because your money would disappear, essentially,” he said.
Cryptocurrencies do have some advantages, including no delay in payments between parties. Also, traditional fees associated with credit card merchants and other money transfers are reduced or eliminated.
