CFPB Warns Consumers of Bitcoin Dangers
Yesterday, the Consumer Financial Protection Bureau issued an advisory warning consumers about the dangers of virtual currencies such as Bitcoin, referring to these currencies as the “Wild West” of the financial world.
The government agency also announced it is now accepting complaints from consumers about these currencies. The CFPB will use the complaints to help enforce federal consumer financial laws.
“Virtual currencies may have potential benefits, but consumers need to be cautious and they need to be asking the right questions,” said CFPB Director Richard Cordray in a statement. “Virtual currencies are not backed by any government or central bank, and at this point consumers are stepping into the Wild West when they engage in the market.”
Consumers buy digital currencies, such as Bitcoin, Dogecoin and Peercoin, on exchanges. Then, they store and manage their virtual currency accounts on digital wallet services.
The CFPB warned consumers of “significant risks”, noting that virtual currency deposits are not federally insured or backed by the government, and are targeted by scammers and hackers. The agency also underscored the high fees and volatile exchanges rates, pointing out that the value of Bitcoins dropped as much as 80% one day this year. Bitcoin kiosks lack many of the safeguards commonly associated with ATM machines.
The CFPB has set up a page where consumers can register complaints on these cryptocurrencies or digital currencies.