» Subscribe Today!
More of what you want to know.
The Daily News
X

Forgot your password?
Skip Navigation LinksHome >
VOL. 129 | NO. 156 | Tuesday, August 12, 2014

US Agency Warns Consumers About Bitcoin Risks

JOSH BOAK | AP Economics Writer

Print | Front Page | Email this story | Comments ()

WASHINGTON (AP) – Federal regulators are warning consumers about the risks of using virtual currencies such as Bitcoin.

The Consumer Financial Protection Bureau said Monday that it will begin fielding complaints from people who rely on products such as Bitcoin and online exchanges for such currencies.

In issuing an advisory warning, the agency noted that the currencies are not backed by the government, have volatile exchanges rates and are targeted by hackers and scammers. And unlike bank accounts, Bitcoin-based deposits are not federally insured.

"Consumers are stepping into the Wild West," CFPB Director Richard Cordray said in a statement.

Still, Cordray acknowledged that virtual currencies "may have potential benefits," noting that they facilitate online transactions by making it easier to process payments.

The Securities and Exchange Commission previously issued an investor alert about Ponzi schemes involving virtual currencies.

Advocates for virtual currencies said they thought the CFPB's characterization of the currencies was generally fair.

Jim Harper, global policy counsel for the Bitcoin Foundation, called the CFPB's warning "pretty standard." He noted that it's "helpful to the extent that it informs consumers without scaring them."

"There are consumer risks around new technologies, and even-keeled educational material from government agencies can help make consumers aware and savvy," Harper said.

The CFPB's warning noted that Bitcoin prices can be highly volatile. In one day last year, it said, prices dropped as much as 61 percent.

But Harper said such volatility should wane in the next 10 to 15 years if virtual currencies become more common.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Sign-Up For Our Free Email Edition
Get the news first with our daily email


 
Blog Get more from The Daily News
Blog News, Training & Events
RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 110 154 13,810
MORTGAGES 135 193 18,019
FORECLOSURE NOTICES 15 39 3,544
BUILDING PERMITS 430 430 32,733
BANKRUPTCIES 52 130 13,133
BUSINESS LICENSES 20 45 4,750
UTILITY CONNECTIONS 83 204 20,104
MARRIAGE LICENSES 0 33 4,230

Weekly Edition

Issues | About

The Memphis News: Business, politics, and the public interest.