WASHINGTON – Federal regulators are warning consumers about the risks of using virtual currencies such as bitcoin.
The Consumer Financial Protection Bureau says it will begin fielding complaints from people who rely on products such as bitcoin and online exchanges for such currencies.
In issuing an advisory warning, the agency notes that the currencies are not backed by the government, have volatile exchanges rates and are targeted by hackers and scammers. And unlike bank accounts, bitcoin-based deposits are not federally insured.
CFPB Director Richard Cordray said in a statement that “consumers are stepping into the Wild West.” Still, Cordray acknowledges that virtual currencies can facilitate online transactions by making it easier to process payments.
The Securities and Exchange Commission previously issued an investor alert about virtual currencies.