U.S. State Regulators issue warnings on virtual currency

by Inline Policy on 30 Apr 2014

Investors should consider risks associated with virtual currencies, including bitcoin, before trading in them, two U.S. regulators warned on Tuesday.

The warnings are the latest in a string of advisories from U.S. state regulators, including Nevada and Maryland, as they look to toughen rules on the use of the controversial cryptocurrency.

"The value of virtualcurrencies is highly volatile and the concept behind the currency is difficult to understand even for sophisticated financial experts," Andrea Seidt, president of the North American Securities Administrators Association (NASAA) president, said in a statement on Tuesday.

NASAA is a Washington-based group of state securities regulators.

The Alabama securities regulator also issued an advisory, expanding on an earlier warning. It has reviewed dozens of complaints from around the United States from consumers who were unable to withdraw their money from bitcoin exchanges.

Most of those complaints were about Mt. Gox, once the world's biggest bitcoin exchange.

The exchange filed for bankruptcy protection in Japan in February, saying it may have lost nearly $350 million worth of the virtual coins due to hacking.

Virtual currencies are subject to minimal regulation and such accounts are not insured by the Federal Deposit Insurance Corporation.

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Source: Reuters

Topics: Financial Services Regulation, Economic policy

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