CFTC joins regulatory chorus in warning investors about the hazards of digital tokens

By Brad Rosen, J.D. The CFTC has issued a customer advisory aimed at would-be investors of virtual coins and ICO’s warning them of potential risks and pitfalls associated with these novel products and emerging markets. With its release titled Use Caution When Buying Digital Coins or Tokens, the CFTC joins recent pronouncements by FINRA and the SEC in raising concerns and potential red flags in connection with these burgeoning digital instruments.In its advisory, the CFTC observes that “Digital tokens and coins can also be derivatives or commodities, depending on how they are structured.” A CFTC spokesperson elaborated stating, “The development of blockchain technologies makes it possible to digitize or tokenize virtually any asset, including physical commodities. Tokens can take many forms, including that of being a contract. The CFTC would look to the terms of the contract to determine whether it may constitute a future or a swap. For example, a…

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