Arkansas Securities Department issues decentralized finance advisory

Little Rock, Arkansas (January 31, 2021) – As part of its ongoing effort to raise investor awareness, the Arkansas Securities Department (ASD) has issued an investor advisory discussing Decentralized Finance (DeFi), a relatively new blockchain-based set of financial services gaining popularity and acceptance. The advisory explains what DeFi is, the technology behind it, how DeFi lending works, potential risks for investors, and how consumers can avoid becoming a victim to a scam.

The growing popularity of cryptocurrencies is one of the main drivers behind the development of alternative banking and business opportunities that may rely on DeFi models.

“Decentralized Finance is an emerging technology and it’s important for investors to understand how DeFi works compared to traditional lending platforms,” ASD Commissioner Eric Munson said. “These alternative financial services providers distinguish themselves from mainstream companies by offering lending, banking and investing options that are decentralized or not dependent on traditional financial markets. Because DeFi is an emerging technology, the risks differ from those in traditional markets.”

Before making any financial decisions, Munson recommends consumers ask questions, do their research, and contact the Arkansas Securities Department at (501) 324-9260 or ASDinfo@arkansas.gov for more information.

The ASD cautions citizen investors of all ages and experiences to thoroughly scrutinize and research any investment opportunity or offer. Contact the ASD at 1-800-981-4429 to check out any person or financial professional offering an investment opportunity or investment advice for a fee and the products they offer for proper registration. Contact the ASD to report suspected fraud, inappropriate securities business practices, or to obtain consumer information. The ASD provides free investor education and fraud prevention materials in print and through educational presentations upon request.

For further information, visit the ASD website at www.securities.arkansas.gov. A copy of the advisory may be found here and under the “Latest News” section of the website.