The association says that many investors may not be aware about the many risks that come with investing in virtual currency.
The North American Securities Administrators Association (NASAA) is warning investors about the dangers of investing in virtual currencies, such as Bitcoin, Litecoin and Peercoin, according to USA Today.
“Unlike traditional currency, these alternatives typically are not backed by tangible assets, are not issued by a governmental authority and are subject to little or no regulation,” told Andrea Seidt, NASAA President and Ohio Securities Commissioner USA Today.
The NASAA also says that the value of the currency is also unpredictable. For example, Bitcoin was worth around $1,000 in December, and now it’s trading for about $450, according to Coinmarketcap.com.
The association also says that investors will have to rely on the strength of their computer security systems, as well as security systems provided by third parties, to protect their e-Wallets from theft.
They also said that investors would be highly reliant upon unregulated companies that may lack certain internal controls and may be more at risk to fraud and theft than regulated financial institutions.
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