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Virtual currencies such as Bitcoin are risky for consumers because there’s no regulatory protection when such currencies are being used for payments or when exchanges fold, the European Banking Authority (EBA) has warned.
In a statement on Friday, the EBA, which is currently trying to figure out whether Bitcoin should be regulated, also said there was “no guarantee that currency values remain stable.” It noted that hackers can sometimes steal digital wallets, and that law enforcement agencies may at any point decide to shut down exchange platforms over money-laundering fears. The authority also said some countries might see Bitcoin as taxable.
While those tracking Bitcoin and its wild fluctuations will probably see all this as an incoming transmission from Captain Obvious, it probably is worth making sure that consumers understand the risk if they intend to get on board.
That said, the warning does occasionally read as though Bitcoin is a form of gambling:
“The EBA recommended that, if consumers buy virtual currencies, they should fully understand their specific characteristics and not use ‘real’ money that they cannot afford to lose.”
True, Bitcoin is a big speculation game at the moment, but a lot of investment is going into making it a serious currency option for consumers – if and when that happens, regulation had better stay on top of things to make sure it’s a safe option.