More state authorities have weighed in on virtual currency and issued warnings about its use.
California and New Mexico have issued new consumer guidance. Alabama, Nevada and Maryland have also issued advisories. Idaho’s Department of Finance issued an investor advisory to consider the risks associated with virtual currency.
The risks highlighted include: minimal regulation, cyber-attacks, lack of recourse should one’s funds disappear, and its being uninsured by the Federal Deposit Insurance Corporation (FDIC), which insures fiat deposits up to $250,000.
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In addition, virtual currency’s inherent volatility and susceptibility to fraud or by unregulated institutions make it unsuitable for many investors.
Also, the president of the North American Securities Administrators Association (NASAA), Andrea Seidt, notably commented:
“The value of virtual currencies is highly volatile and the concept behind the currency is difficult to understand even for sophisticated financial experts.”
The coordinated state activity comes right after NASAA and the Conference of State Bank Supervisors (CSBS) joined forces to issue a guidance document on virtual currency.