The statement said of which because trading on the Cboe gives bitcoin an air of legitimacy, investors must be aware of the inherent risks of investing in bitcoin in addition to the fraudulent schemes associated with the idea.
Galvin’s comment comes just days after U.S. Securities in addition to Exchange Commission Chairman Jay Clayton warned investors against putting money into cryptocurrencies.
Secretary of the Commonwealth William F. Galvin today warned investors not to get caught up in Bitcoin speculation.
“Bitcoin will be just the latest in a history of speculative bubbles of which most often burst, leaving the average investors which has a worthless product,” Secretary Galvin said. “Going back to the 1600s with tulip mania to the present Bitcoin craze, chasing the next best thing will, more often than not, end in disaster for the average investor.”
Bitcoin futures began trading on the Chicago Board Options Exchange (CBOE) on December 10, 2017. Bitcoin has also been the target of major hacks at the exchange in addition to wallet levels, leaving many Bitcoin holders with huge losses. Because trading on the CBOE gives Bitcoin an air of legitimacy, investors must be aware of the inherent risks of investing in Bitcoin in addition to the fraudulent schemes associated with the idea, Galvin’s office warned.
Bitcoin continues to attract intense media attention as the cost of Bitcoin dips in addition to soars. Conflicting information about Bitcoin abounds, with some calling the idea a “craze” or a “bubble” in addition to others touting the idea as an amazing investment.
Before purchasing in Bitcoin, Secretary Galvin’s office suggests investors consider the following:
1. Bitcoin in addition to different virtual currencies are not regular money, as they are not backed by the United States or any different government or central bank.
2. Carefully investigate the seller before doing a purchase of Bitcoin. You may want to consider what recourse you would certainly have, in case something goes wrong. Compare the fees in addition to costs associated with Bitcoin purchases in addition to ask about the terms for redeeming Bitcoin into regular money.
3. Virtual wallets used to store Bitcoin do not provide the same safeguards as deposits made at a traditional banking institution. Unrecoverable losses can occur when Bitcoin will be stolen coming from these virtual wallets.
4. Bitcoin values fluctuate enormously in addition to can do so in a very short period of time. Be prepared for radical value improvements in your Bitcoin investment, including single day drops or increases within the thousands of dollars.
5. Bitcoin investing will be generally considered to be speculation, since the value will be not related to any economic or financial parameters. Never speculate with money of which you cannot afford to lose.
6. Bitcoin in addition to different virtual currencies are based on a public ledger called the “Blockchain,” which will be still experimental in addition to will be subject to improvements, errors, or criminal activity which could adversely affect your virtual wallet or erase your Bitcoin value.
7. The unregulated in addition to ambiguous nature of Bitcoin provides a fertile ground for investment scams in addition to different financial fraud, which can cause Bitcoin investors to lose their money.
Anyone wishing to check the registration status of someone offering to sell Bitcoin or different products tied to Bitcoin may contact Secretary Galvin’s Securities Division at 1-800-269-5428. Additional information may be found on Secretary Galvin’s website, www.sec.state.ma.us.