As the popularity of bitcoin keeps surging, the virtual currency faces increased scrutiny from state regulators in Massachusetts and others in the entire US.
“We will be trying to come up with a model law or regulations states can use. This has gotten a lot of attention, and we want to make sure when we act, we get it right,” Boston Herald quoted David Cotney, commissioner at the Massachusetts Division of Banks as saying.
Cotney also chairs the Emerging Payment Task Force, which is constituted by nine state regulators with the view of looking into how cryptocurrencies work.
The group held a hearing on the issue, where bitcoin-related investors and regulators had been invited to offer testimony.
Regulator Barbara Anthony from the Massachusetts Office of Consumer Affairs and Business Regulation said that while some financial institutions wanted to venture into the virtual currency, they had not been well informed on potential risks.
She said that users needed to realize that trading in virtual currencies was associated with certain challenges.
“The kinds of consumer protections that we’re used to, people have to understand they are not available to virtual currencies,” Anthony added.
Anthony also mentioned lack of a central regulatory authority as matter about which bitcoin users should be concerned.
Anthony pointed at bitcoin’s instability as one of the cryptocurrency’s common risks. She made the point that an amount of bitcoins may be worth $100 in one day but fluctuate to another value the following day, NewsBTC reported.
While no state regulations on the digital currency seem to be in the offing, at least for now, some stakeholders in the bitcoin fraternity appear to be pleased with the move by government officials to allow public input. Cotney said he has no immediate intentions to implement any regulations, although he could at some point down the road.
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To contact the reporter of this story; Deepak Tiwari at email@example.com