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Kansas Latest US State to Warn on Crypto Investment Risk

The securities commissioner of the U.S. state of Kansas has issued a warning on the risks of cryptocurrency and ICO investments.

On Jan. 25, the Office of Securities Commissioner – a division of the Kansas Insurance Department – issued a statement to the public that investment in cryptocurrencies, including initial coin offerings (ICOs) and futures tied to digital currencies, are not insured by the government.

As such, the commissioner warns investors to be cautious regarding investment pitfalls.

John Wine, the state’s securities commissioner, said:

“Investors should go beyond the headlines and hype to understand the risks associated with investments in cryptocurrencies, as well as cryptocurrency futures contracts and other financial products where these virtual currencies are linked in some way to the underlying investment.”

In addition, the State Insurance Department highlights that projects that give promises of high return, make unsolicited offers or pressure investors, are “red flags” of fraudulent schemes that investors should be aware of.

The statement, although not entirely surprising, once more signals that regulators in the U.S., at both state and federal levels, are paying closer attention to cryptocurrency activities, especially those that may be considered as issuing securities under disguise of token sales.

Just last week, the chiefs of the U.S. Securities and Exchange Commission and the Commodity and Futures Trade Commission (CFTC) said through an op-ed article that federal regulators are increasing their resources and efforts in scrutinizing cryptocurrencies.

At law enforcement level, in addition to three recent lawsuits brought by the CFTC against cryptocurrency operators, state level government bodies such as Texas State Securities Board and Department of Banking have recently given cease-and-desist orders to initial coin offerings and cryptocurrency banking services, citing the violation of financial regulations.

Kansas State Capitol image via Shutterstock

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Kansas Commission: Political Candidates Cannot Accept Bitcoin

A government ethics body in Kansas is advising political candidates to not accept bitcoin.

New guidance from the Kansas Governmental Ethics Commission indicates that election watchdogs in the U.S. state are planning to study the issue further, but for now, campaigns are being told to abstain from taking cryptocurrency contributions.

Mark Skoglund, the commission’s executive director, told CoinDesk he asked the body for guidance after a candidate for public office asked about the option.

While the guidance disallows bitcoin from being used in campaign contributions at present, the door to future acceptance appears to be somewhat open for now.

Skoglund said:

“That is the current guidance. It is not a formal opinion, but as a director I asked the commission for guidance, and until further studies are conducted, bitcoin cannot be used for a campaign contribution.”

Unlike an advisory opinion, the guidance issued by the commission does not have the force of law. It is unclear whether a formal advisory opinion will be issued in the future.

While there is no set plan for conducting studies on bitcoin or otherwise looking into its use, Skoglund said he intends to compile research on what other states have done and speak to officials from these states during an upcoming conference.

It’s a notable development, given that the Federal Election Commission (FEC) – which oversees national-level campaigns – approved the acceptance of bitcoin as an in-kind donation – effectively property that can be contributed – in 2014. Additionally, as previously reported by CoinDesk, the FEC could move to shift the rules around bitcoin, treating them like cash donations instead.

Kansas field image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.