In recent times, cryptocurrencies are headlining for the wrong reasons. If an investor is not being duped through a defective ICO, regulators are releasing advisories, cautioning their citizens to avoid cryptocurrencies. What do all these portents mean to the blockchain industry? Without mincing words, they mean that prospective crypto-asset investments are most likely to continue dropping. Furthermore, to make matters worse, the US Commodity Futures Trading Commission (CFTC) released strong-worded warnings, cautioning investors from ICO participation.

The Customer Advisory

The CFTC is now joining forces with US Securities and Exchange Commission (SEC). They plan to issue investment advisories to prospective crypto-asset investors. Titled “Use Caution When Buying Digital Coins or Tokens,” the warning note focuses on areas where certain cryptocurrencies seem to be running afoul of the rules and regulations of the agency.

In the press release, the CFTC noted that buying digital coins and tokens in the hopes of selling them at higher rates carries a high level of risk despite how attractive the white paper or the business plan is. The statement continues, “unfortunately, risk is not the only factor you have to grapple with as you can potentially become a victim of fraud.” It added that all investors should carry out extensive research before investing in such businesses.

Classification Of Crypto-assets

In a warning note released on Monday, the CFTC says that virtual coins and tokens can also receive classification as commodities or derivatives. This, the report states, depends on the architecture. From Monday’s missive, one can also infer that most digital tokens issuers are churning out fall under the agency purview. In 2015, the agency classified Bitcoin to fall into its commodities category.

Activities Of The Agency

The CFTC has always been critical of the activities of ICO issuers. They worry those issuers tend to capitalize on the dark web to defraud crypto-asset investors. They hope to ensure that American people don’t fall prey to these cyber con artists.

Similarly, the SEC has always been in the forefront of the campaign, issuing investment advisories to mom-and-pop investors. Despite US regulators bringing cryptocurrency and its related products under close scrutiny, ICO crooks continue to prey on the citizens, prompting the SEC and the also CFTC to release periodic warnings against participating in such fraudulent ventures.

Detailing Warning

The CFTC detailed factors that could make utility tokens not grow in the market as some would expect. The listed factors were: hacking risk, changes in blockchain technology, competitors’ risks, diminishing validation and mining costs, among many others.