Consumers should be wary of cryptocurrency retirement accounts claiming to be approved by the Internal Revenue Service, the Commodity Futures Trading Commission (CFTC) has warned.
In a new circular dated Feb. 2, the CFTC is calling for people to “be cautious” about such pitches, especially those claiming that the U.S. tax authority had in some way reviewed or endorsed the product. The IRS, the CFTC noted, “does not approve or review investments for IRAs.”
The agency went on to write:
“Taxpayers tend to focus on retirement savings more at tax time in order to increase deductions or maximize savings. As a result, some businesses may attempt to lure customers into buying highly volatile cryptocurrencies using false claims or by painting virtual currencies as less risky because they can be used for retirement saving.”
As previously reported by CoinDesk, individual retirement accounts involving cryptocurrencies aren’t exactly new. But the CFTC circular indicates that some pitches being made to U.S. taxpayers in recent do not disclose all of the relevant risks – or are outright fraudulent.
“Custodians and trustees of self-directed IRAs may have limited duties to investors and generally will not evaluate the quality or legitimacy of an investment or its promoters,” the agency said in its release.
The CFTC has taken an increasingly proactive role in regulating activities around cryptocurrencies, including a recent move to beef up its scrutiny of proposed financial products including futures. Agency chairman, J. Christopher Giancarlo, is set to appear before the Senate Banking Committee on Feb. 6 to discuss the CFTC’s oversight of the market.
CFTC emblem image via Shutterstock