7/5/2014: SEC’s Bitcoin Alert… Much ado about little

As reported by FT.com: http://www.ft.com/intl/fastft

SEC (US financial watchdog) issued an “investor alert” relating to Bitcoin, “warning that it could expose investors to fraud and unforeseen risks.”

“The alert, …said that both fraudsters and promoters of “high-risk investment schemes” could target Bitcoin users, and cautioned consumers to be wary.”

“…today’s release was a more general warning, arguing that the virtual currency presented “unique risks” to potential investors. Below are the risks the regulator listed.

1) Not insured. Which we all know…

2) History of volatility. Which I noted earlier… http://trueeconomics.blogspot.ie/2014/02/1722014-is-bitcoin-real-currency.html

3) Government regulation. A new-ish one for the US: “Bitcoins are not legal tender. Federal, state or foreign governments may restrict the use and exchange of Bitcoin.” But not so new for global markets, where we’ve seen bans on BitCoin in the likes of China…

4) Security concerns. Nothing new there…

5) New and developing. Aka: reputational: “As a recent invention, Bitcoin does not have an established track record of credibility and trust. Bitcoin and other virtual currencies are evolving.”