As bitcoin turns 10 on Wednesday, investors are being warned by the Competition Bureau that what could be a once-in-a-lifetime cryptocurrency investment could actually be fraud.
Fraudsters increasingly use cryptocurrency hype to take advantage of investors, the organization says in a release. For example, investors can be tricked into investing in fake initial coin offerings through Internet ads and websites.
Fraudsters also use pyramid schemes or fraudulent market manipulation to trick investors who want to get in on the cryptocurrency craze, the release says.
The Competition Bureau has tips for those who want to invest in initial digital coin offerings, cryptocurrencies or any cryptocurrency-related products:
- Learn about cryptocurrencies and understand the risks.
- Be wary of any investment tip you receive through social media, as well as get-rich-quick promises.
- Be skeptical of celebrity endorsements and testimonials.
- Research the company and people behind the cryptocurrency investment.
Regulation of cryptoassets
Cryptoassets pose a number of risks, notably to consumers, market integrity and financial crime, the U.K.’s Cryptoassets Taskforce said in its final report published Monday. The taskforce consists of HM Treasury, the Financial Conduct Authority and the Bank of England.
“There is limited evidence of the current generation of cryptoassets delivering benefits,” says the report, though benefits may arise in the future, it adds.
Over the next year, the taskforce will hold consultations on potential changes to the U.K’s policy and regulations concerning cryptoassets.
Nigel Green, founder and CEO of deVere Group, is in favour of regulating cryptocurrencies, in particular.
The growing demand for digital currencies indicates cryptocurrencies are the future of money, says Green in a release. He forecasts the cryptocurrency market could one day be worth $20 trillion, up from its current value of more than $400 billion.
“There is a clear need for a robust international regulatory framework and ongoing supervision in order to further protect both retail and institutional investors, as well as to help tackle illicit activity,” he says in the release.