Regulators in the Caribbean warn consumers on risks of cryptocurrencies

A group of major institutions in a Caribbean country have warned against the risks posed by crypto fraud.

A joint statement from several leading financial institutions in Trinidad and Tobago described cryptocurrencies as “volatile” and warned that this “may make them unsuitable for most investors”.

The statement, which was described as a “Joint Public Advisory”, came from a number of organisations. This included the Trinidad and Tobago Securities and Exchange Commission as well as the country’s Financial Intelligence Unit.

The Central Bank of Trinidad and Tobago was also part of the group.

The substance of the statement began by pointing out that there were currently no laws in place in Trinidad and Tobago covering the use of cryptocurrencies.

“Providers of virtual currencies are neither regulated nor supervised by the Authorities at present and there are currently not legislative provisions under the Authorities’ purview that provide protection to consumers for losses arising from the use of virtual currencies”, they wrote.

“In addition, unregulated virtual currency companies may lack appropriate internal controls and may be more susceptible to fraud and theft than regulated financial institutions.

The statement also pointed out that the value of a crypto token can rise and fall.

“Virtual currencies tend to be volatile and their value can fluctuate significantly”, it said.

“The high volatility of virtual currencies may make them unsuitable for most investors, especially those investing for long-term goals or retirement.”

Trinidad and Tobago is a country of 1,369,000 people.

Like several other Caribbean countries, it has developed a reputation as pro-investment – and as such has a number of investor-friendly features, such as capital markets.

However, in this most recent statement, the authorities appeared keen to emphasise their view that cryptocurrencies stood apart and distinct from other forms of investment.

While there was no suggestion that the organisations which produced the statement would look to lobby for regulation, they did promise to remain vigilant against particular threats.

“Further, the Authorities note with concern the emergence of schemes purporting to be virtual currencies that promise high returns when members purchase tokens and recruit others to join/invest”, it said.

“We advise members of the public to be cautious of such schemes and conduct appropriate due diligence as these may be Ponzi schemes in disguise.

“The Authorities shall continue to monitor activities involving the use of virtual currencies and advise the public accordingly”, it added.

The country has grappled with issues around crypto fraud previously, which may have influenced the decision of these authorities to come out with their recent warning.

Last year, the country’s Finance Ministry was forced to issue a statement confirming it had nothing to do with an exchange and initial coin offering, or ICO, which was taking place in the nation.

The Securities and Exchange Commission had to confirm that it had not approved the scheme, known as BarterCoin.

In a sign of the public mood, a comment piece published in the Trinidad and Tobago Guardian in the same year asked whether “unscrupulous individuals” can “manipulate crypto prices”.

Chris Lee

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