As bitcoin becomes more popular, financial regulators in Big Sky Country want to get ahead of the peer-to-peer decentralized digital currency before Montanans begin investing their money into bitcoins.
Montana Securities Commissioner Monica Lindeen posted a bitcoin investor advisory Thursday – akin to several other preceding states that have issued consumer alerts. The guidance included Lindeen urging consumers to think about the risks prior to allocating funds into the virtual currency.
The alert highlighted that bitcoin was established five years ago and it’s most popular among libertarians, technology enthusiasts, investors and other individuals that want to transfer money between people and take part in transactions without the hand of governments, central banks or financial institutions.
Lindeen explained that bitcoin comes with very little regulation, which means it is not insured by the Federal Deposit Insurance Corporation (FDIC) and it is susceptible to cyber attacks and thefts. This means that some cryptocurrency investors will have to depend upon bitcoin businesses that will likely not be regulated.
The alert also noted that consumers need to utilize security software as well as maintaining intense safeguards to protect and defend digital wallets.
“We do know that Bitcoin is becoming more popular, and frankly we kind of want to get out in front of it and give people the information at the front end before they get into the virtual currency investing,” said Jennifer McKee, a spokesperson for Lindeen, told NBC News.
In addition, the news outlet interviewed a Montana man who had purchased bitcoin holdings in its early days at $20. Since then, the investor had earned approximately half a million dollars, though he noted that the price of bitcoin has gone up too high and has since become too risky.
“The Bitcoin has gone up and crashed twice now, and we’re looking at the third run, and so it’s either going to peak or disappear,” the Montana man said. He added that if it drops to $100 then he may buy some again.
States Issuing Consumer Alerts
We have reported in recent weeks of the various states that have issued consumer and investor alerts and advisories. Some of them consist of Missouri, Tennessee, Iowa, Wisconsin, Idaho and others. Each state has listed the number of concerns and risks posed by bitcoin, such as the security apparatus, the paucity of regulations and insurance and the immense volatility associated with it.
This week, the Securities and Exchange Commission (SEC) posted an extensive alert warning of various frauds and reporting that the virtual currency could possibly be used for any Ponzi schemes.
At the time of this writing, bitcoin is trading at just under $450.
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