The Mt. Gox collapse seems to have sent tremors in regulatory bodies as one after another are coming up with warnings. Now in the league is FINRA, an independent, industry-funded regulator for more than 4,100 securities firms that employ about 632,000 brokers. The Washington based body says that Bitcoin investors need to be careful.
FINRA which stands for the Financial Industry Regulatory Authority issued a new investor alert called Bitcoin: More than a Bit Risky to caution investors that buying and using digital currencies such as Bitcoin carry risks. The regulator body reminded prospective Bitcoin investors to never speculate with money they cannot afford to lose.
In its warning, FINRA also said that traders need to keep a distance from platforms for the currency can be hacked or fail. The major reason behind the warning seems that though almost all currency trading carries risk, Bitcoin has additional risk of being hacked.
Recently, ForexMinute reported how some major Bitcoin exchanges including Mt. Gox were hacked.
According to Gerri Walsh, FINRA’s Senior Vice President for Investor Education speculators drawn to Bitcoin trading should understand that Bitcoin prices have fluctuated widely, almost from the currency’s inception. However, the risk is not just speculation but the fraudulent activities that have been visible.
Warning the Bitcoin investors Mr. Walsh said that those who are looking to get in on the ground floor of a Bitcoin-related company should realize that fraudsters may see the latest digital currency trend as a chance to steal their money through old-fashioned fraud.
Several incidences of hacking of Bitcoin seem to have prompted the regulatory body to issue the warning.
Prospective Buyers Must Read ‘Bitcoin: More than a Bit Risky”
In its warning FINRA said that in addition to the dangers of Bitcoin-related scams and speculation, there are various other risks involved in Bitcoin which have all been exposed in ‘Bitcoin: More than a Bit Risky.’ It will help investors know how Bitcoin works and discusses many of the risks associated with buying and selling Bitcoin.
The issued warning also contains information about the recent events that made clear that platforms that buy and sell Bitcoins can be hacked, and some have failed. A major problem with Bitcoin investors is that unlike the security provided by the US banks and credit unions for depositors, in Bitcoin, there is no such safety and security to investors.
According to FINRA Bitcoins residing in so-called “digital wallets” do not provide security to depositors and this is not hypothetical but have been shown by recent incidents. It is to be noted that Mt. Gox failed to provide security to Bitcoin investors.
To contact the reporter of this story: Deepak Tiwari at firstname.lastname@example.org