State Cautions Investors About Interest-Bearing Accounts


SANTA FE — The New Mexico Regulation and Licensing Department (NMRLD) cautions New Mexicans about the risks associated with interest-bearing cryptoasset/cryptocurrency accounts.

A growing number of companies offer so-called “deposit” account products that promise to pay high rates of interest on deposits of cryptocurrencies. When an investor makes a deposit, they typically exchange their cryptocurrency for a promise by the issuing company or the borrower for a return of the same amount of cryptocurrency plus interest whenever the investor requests a withdrawal of the invested funds or at the end of a fixed term.

“Investors should be cautious and skeptical of investment offers that sound “too good to be true” or that offer guaranteed high returns with little risk. All investments carry the risk that some or all of the invested funds could be lost. High interest rates could often indicate high risks” Superintendent Linda M. Trujillo said.

Cryptocurrency accounts may appear to be similar to savings accounts offered by banks and credit unions, except these interest-bearing accounts are generally much riskier. Deposits made by investors are only denominated in cryptocurrency. Neither the FDIC nor any other governmental agency insure deposits in cryptocurrency interest-bearing accounts.

The companies that offer these products do not have access to the liquidity facilities that exist in the regulated banking system to protect depositors.

The high rates offered by these companies have caused retail investors to consider investing in these accounts. 

The Department’s Securities Division and the Financial Institutions Division are working together to provide additional information and explanation relating to this issue. The Securities Division will take your calls at 800.704.5533.

The New Mexico Regulation and Licensing Department regulates more than 500,000 individuals and businesses in 35 industries, professions, and trades across the state. Its goal is to assure that New Mexicans receive quality services from qualified individuals and businesses while also ensuring fair and prompt administrative process.