State Watchdog Agency in Maine Issues Warning Against Digital Currencies

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According to the local reports from Maine, a state in the New England region of the northeastern United States, the state’s watchdog agency has issued a warning against digital currencies, such as Bitcoin, Ripple and Litecoin. The warning message from the agency says that it is aimed to protect investors from the risks of investing in the cryptocurrencies.

In the issued warning from the Maine Office of Securities, investors are being informed that virtual currencies are subject to minimal regulation and as these are not insured by the Federal Deposit Insurance Corporation as well as there is no protection against hackers, investors should avoid investing.

There are several apprehensions that are being put by the watchdog agency of Maine wherein it says that Bitcoin and other similar digital currencies are not dependable as these depend on the strength of a person’s computer security systems and those of third-party “e-wallet” service providers which can be breached with little efforts.

Therefore, according to the Maine Office of Securities investors should take these factors into their mind when investing in any of these digital currencies. The worse according to the regulatory body is that the value of the currencies tends to be volatile which may incur huge losses for investors.

In his statement Securities Administrator Judith Shaw said that the concept behind the currency is difficult to understand even for sophisticated financial experts. He thinks that investors should be aware that investments incorporating virtual currency present very real risks and for that simple reason investors must take a cautious approach.

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The Warning Seems to be prompted by Mt. Gox Collapse

Maine is not the only or the first state in the US that has issued warning against the use of Bitcoin. Several other states like California and New Mexico and the North American Securities Administrators Association, which drafted a model notice in April have cleared their stand earlier.

Shaw said the state office has not had any reports of fraud or complaints about virtual currency in Maine; however, the agency is watching it very closely to see if other state or federal regulators are going to actually regulate virtual currencies.

The issued warning seems to have been influenced by the April bankruptcy filing of the Japan-based Bitcoin exchange Mt. Gox. The Bitcoin exchange lost more than $350 million in virtual currency after hackers broke into the exchange; this has impacted Bitcoin to a great extent.

To contact the reporter of this story: Deepak Tiwari at deepak@forexminute.com