'Do your homework' before digital currency investments, securities regulator warns

Iowa Insurance Division Commissioner Doug Ommen says Iowans should proceed with caution before making investments in cryptocurrencies like Bitcoin because they're "fraught with risk."

Investment in cryptocurrencies like Bitcoin and Dragon Chain has captured the attention of investors worldwide but a top financial securities official in Iowa warns that these investments are fraught with risk, recommending that Iowans do some research before taking the risk.

“Scam artists will use current events such as these technological developments to create the illusion of legitimate investments," said Doug Ommen, commissioner of the Iowa Insurance Division, the state's securities regulator.

He says he and other state and federal regulators have real concerns about investing in these digital currencies, of which there are hundreds, because there’s a blurred line between what’s real and what’s fake

Ommen's office released a statement in January, warning investors to proceed with caution when making these types of investments. He says that he and other state and federal regulators have real concerns because there’s a blurred line between real and fake investments.

These regulators, like Ommen, are making efforts to make the public aware of the risks before they make investments in these types of currencies.

“Even for me sitting here today, it’s really hard for me to call out those that are real from those that are legitimate from the fraudulent promotions because a lot of times it’s just not readily apparent on its face," Ommen said. His office is actively monitoring these investments in order to determine those that are fraudulent.

"Unfortunately some people will run the risk of losing money before we're able to identify an investment opportunity as being fradulent," Ommen said.

Ommen says that the value of these currencies see large fluctuations because their value is market-driven, based on relative value to other known currencies like the U.S. dollar.

"There is no federal reserve as there is with the U.S. dollar to monitor and evaluate the value of currency and so it is, to some degree, the wild, wild west," Ommen said.

If you're concerned about investment being potentially fraudulent, Ommen encourages Iowans to reach out to the Iowa Insurance Division for more information.

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