WDFI cautions investors about crypto accounts

The Wisconsin Department of Financial Institutions (WDFI) is cautioning Wisconsin investors about the risks associated with interest-bearing crypto assets and cryptocurrency accounts. The so-called “deposit” accounts, offered by a growing number of companies, promise to pay high rates of interest on deposits of cryptocurrencies. When an investor makes a deposit, they exchange cryptocurrency for a promise by the issuing company of a return of the same amount of cryptocurrency plus interest. The WDFI warns of investment offers that sound “too good to be true” or that offer guaranteed high returns with little risk. Cryptocurrency accounts may appear to be similar to savings accounts offered by banks and credit unions, except these interest-bearing accounts are generally much riskier since neither the FDIC nor other governmental agencies insure deposits in cryptocurrency.