Tallahassee, Florida – The Office of Financial Regulation (OFR) today issued an investor advisory to raise awareness about decentralized finance (DeFi), a relatively new blockchain-based group of financial services gaining popularity.
OFR Commissioner Russell C. Weigel, III, said, “DeFi-based companies offer lending, banking, and investing options that are decentralized and not dependent on traditional financial markets. This evolution of financial services is not necessarily a bad thing and maybe a good thing, but before getting involved with a company or product in the DeFi market, take reasonable steps to understand the risks of this emerging blockchain-based technology and market. The Office of Financial Regulation is committed to allowing innovation to grow and thrive while protecting Floridians from bad actors, but the best practice is to educate yourself before risking your money.”
Read the full advisory below to learn what Floridians should consider before using DeFi-based services. The advisory also 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.
Before committing to a decision on a financial services business or professional, protect yourself by doing your homework.
- Talk to multiple professionals beforehand and find someone who aligns with your priorities.
- Stay away from unsolicited offers, high-pressure sales tactics, or offers that sound too good to be true.
- Be sure you can independently verify all the information provided.
- Ask questions if there is something you do not understand.
- Get everything in writing and read the written agreement carefully and completely before signing it.
- Do not let yourself be rushed; take the time you need to make an informed decision.
DeFi investment opportunities and markets are new and typically highly volatile and appear to be driven more by psychological factors than investment fundamentals. Many digital asset investment opportunities are not asset-backed. Do not invest more than you can afford to lose because most DeFi opportunities are not insured against theft or loss.
Floridians are encouraged to check the license status of any new financial services business or professional that they plan to do business with by contacting the OFR online at www.flofr.gov or by calling (850) 487-9687.
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