Are cryptocurrencies legal? How do I protect myself?

Are cryptocurrencies legal？

There's no question that they're legal in the United States, though some country has essentially banned their use, and ultimately whether theyre legal depends on each individual country. Also be sure to consider how to protect yourself from fraudsters who see cryptocurrencies as an opportunity to bilk investors.

How do I protect myself？

If you're looking to buy a cryptocurrency in an ICO, read the fine print in the company's prospectus for this information:

• Who owns the company？ An identifiable and well-known owner is a positive sign.

• Are there other major investors who are investing in it？ Its a good sign if other well-known investors want a piece of the currency.

• Will you own a stake in the company or just currency or tokens？ This distinction is important. Owning a stake means you get to participate in its earnings (youre an owner), while buying tokens simply means you're entitled to use them, like chips in a casino.

• Is the currency already developed, or is the company looking to raise money to develop it？ The further along the product, the less risky it is. It can take a lot of work to comb through a prospectus; the more detail it has, the better your chances it's legitimate. But even legitimacy doesn't mean the currency will succeed. Thats an entirely separate question, and that requires a lot of market savvy.

But beyond those concerns, just having cryptocurrency exposes you to the risk of theft, as hackers try to penetrate the computer networks that maintain your assets. Those arent typical risks for investing in stocks and funds on major U.S. exchanges.