Oregon State Agency Receives Coinbase and Digital Currency Complaints, Offers Warnings
On January 10, 2018 The Bend Bulletin reported that Oregon’s Department of Consumer and Business Services received complaints from consumers related to Coinbase. Spokes man Brad Hilliard said the costumer complaints were in regards to delays in receiving their digital currency on Coinbase. Since then other local news have published the story.
Coinbase is a digital currency exchange and “wallet” that has complied with every State willing to provide them with a money transmitter license. They received a money transmitter license from the State of Oregon in April 2015 under the Oregon Money Transmitters Act. Complaints included Coinbase costumers seeing money drained from their Coinbase accounts. Hilliard stated that such occurrences are more likely to be the cause of identity thieves instead of the Coinbase service.
This Monday, January 22nd the Oregon Department of Consumer and Business Services (DCBS) has released warnings about digital currency to consumers and investors. Acting DCBS director Cameron Smith warned Oregoneans of Cryptocurrency risks, “Cryptocurrency is a hot trend that is getting a lot of media attention today. Like all popular financial trends, we encourage Oregonians to be cautious and know the risks before purchasing this unstable and unregulated currency.”
Understand the risk — Digital currency is unstable and can experience a sudden increase and decrease in value. The market has seen almost a 50 percent drop in value last week alone. It is not subject to regulation in the U.S., so the government cannot help you if your digital currency is lost, stolen, or hacked.
Difficult to get your cash — Turning cash into digital currency is easy, but it can be difficult to turn it back into cash when you need it. This can prove risky considering how erratic the markets can be.
Not federally insured — Unlike money deposited into banks and credit unions, digital currency is not insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Association (NCUA).
Do not spend or exchange money you cannot afford to lose — The volatility of the digital currency market means that you should not use money that is needed for essential purposes, such as paying regular expense, debt, or saving for education expenses.
Treat digital currency investments like a commodity — Treat cryptocurrency like a non liquid investment similar to oil, copper, or gold, and understand that digital currencies do not have the basic value of most commodities.
Use a digital currency exchange that is licensed with the state — Oregon law does not require digital currency exchange companies, which only turn cash into digital currency, to be licensed. However, companies that help transfer digital currency from one person to another are required to be licensed by the state as a money transmitter.
“Cryptocurrency is a hot trend that is getting a lot of media attention today,” said Cameron Smith, acting DCBS director. “Like all popular financial trends, we encourage Oregonians to be cautious and know the risks before purchasing this unstable and unregulated currency.”
Oregonians can check the money transmitter license of a digital currency exchange at http://dfr.oregon.gov/gethelp/Pages/check-license.aspx/.
Oregonians who need help with their digital currency exchange company can contact the Division of Financial Regulation at 866-814-9710 (toll-free) or visit http://dfr.oregon.gov
“The important message right now is to be cautious before investing in cryptocurrency, and do not invest any money that you cannot afford to lose,” added Hilliard, “People interested in investing in cryptocurrency should treat it as a commodity, like gold. It should not be treated as a liquid investment.”
The full Press Release cab be found at the Oregon.gov State website here.
Felix Shipkevich is a principal of Shipkevich PLLC. His practice focuses on providing counsel to FinTech and financial services firms, including financial technology, payments and emerging digital currency space. He has spoken at national panels in the money transmitter space and payments industry. Mr. Shipkevich’s payments practice has brought him into contact with money transmitter registration requirements in all fifty U.S. States.
To read his full profile, click here.