The Financial Industry Regulatory Authority (also known as FINRA), the largest independent regulator for fall securities firms that do business in the USA), has issued an investor alert on bitcoin entitled Bitcoin: More than a Bit Risky, which aims to caution investors who may be looking to invest in the emerging digital currency.
The report makes note of the fact that bitcoin is volatile due to speculative trading, and also that “there is also the risk of fraud related to companies claiming to offer Bitcoin payment platforms and other Bitcoin-related products and services.”
The authority’s statement echo a number of alerts issued by governments around the world, and even a couple of U.S. states.
“Speculators drawn to Bitcoin trading should understand that Bitcoin prices have fluctuated widely, and wildly, almost from the currency’s inception,” said FINRA Senior Vice President for Investor Education. “Investors looking to get in on the ground floor of a Bitcoin-related company should realize that fraudsters may see the latest digital currency trend as a chance to steal their money through old-fashioned fraud.”
Bitcoin: More than a Bit Risky also includes a brief primer on the bitcoin technology and other risk warnings, such as the fact that bitcoin is not backed by any government entity.
The FINRA report can be found in its entirety here.