Massachusetts To Consumers: Beware Bitcoins

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A Massachusetts state agency on Tuesday warned people considering purchasing Bitcoins “to proceed with caution because of the high-financial risks involved.”

In a statement posted on the state’s Office of Consumer Affairs and Business Regulation’s website, the agency referred to the recent collapse of Mt. Gox, the one-time largest Bitcoin exchange, and the recent unveiling of a Bitcoin “ATM” in Boston’s South Station.

“Proponents of Bitcoin make the point that this virtual currency allows for a faster, no-fee payment system, which is attractive to both merchants and consumers,” the agency said. “While there is a demand for a faster and more efficient commercial payment system, the question is whether bitcoins are the most appropriate and safest alternative to satisfy that demand.”

The statement warned consumers that they could lose their money on an exchange, that Bitcoins could be stolen from “virtual wallets,” that the value of Bitcoins can fluctuate, and that Bitcoins are not FDIC insured.

“[I]f you can’t afford to lose the money you have, you should not buy bitcoins,” the agency said. “For other consumers who are thinking about buying bitcoins, you should do your due diligence, just as with making any investment and weigh all the risks.”

Read the whole thing here.

(h/t Boston Magazine)

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Eric Lach is a reporter for TPM. From 2010 to 2011, he was a news writer in charge of the website?s front page. He has previously written for The Daily, NewYorker.com, GlobalPost and other publications. He can be reached at ericl@talkingpointsmemo.com
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