Missouri Secretary of State Jason Kander issued an Investor Alert on Thursday warning state residents about the risks and hazards that come with buying, trading or investing in peer-to-peer decentralized digital currencies such as bitcoin.
The state official argued the investments made in Internet-based financial products are dangerous because they carry risk and have not been properly studied. Kander explained that the best approach when it comes to investment opportunities is to incite caution and to tread carefully when moving forward.
“It’s important to recognize that in many cases not even the supposed Bitcoin and digital currency experts know enough about the product to help you make a fully informed investment decision,” Kander said in a statement. “It’s best to rely on only the most reputable sources of information and do your own due diligence before investing in potentially risky products.”
The statement noted that bitcoins are not issued by governments or financial institutions and federal regulations remain unclear because officials are still studying and assessing the cryptocurrency industry. The Internal Revenue Service (IRS) has declared bitcoin as a property and is subjected to taxation – if someone sells any of its holdings then it could be applied under capital gains taxes.
Kander listed a number of risks affiliated with bitcoin, including investors losing their digital holdings because of users getting hacked or a bitcoin exchange shutting down because it has been a victim of theft. Another potential threat is that bitcoin transactions are irreversible. This means that once a transaction is complete then it cannot be reversed.
He added that investments that are bought and sold as a means to make a quick buck can also create “a quick loss.” In the end, Kander is warning all Missourians to be suspicious on investments that promise a speedily return.
“Before making any investment decision, Missourians are encouraged to contact Kander’s office at 1-800-721-7996 or www.MissouriSafeSavings.com and request information on the person or product they are considering investing with,” he ended his statement.
Indeed, it has been quite a while since any sort of government body has issued a consumer or investor alert. Over the past several months, numerous governments and central banks worldwide regularly presented the public with warnings about the dangers associated with bitcoins and other digital currencies, like dogecoins and litecoins.
One of the latest warnings originated from Denmark, where its central bank described bitcoins akin to “glass beads” in a briefing note.
“Bitcoins are not money in a proper sense as there is no issuer behind them,” the report stated. “Instead, bitcoins display the characteristics of a commodity to which users attach value. Unlike precious metals such as gold and silver, bitcoins have no actual utility value, bearing closer resemblance to glass beads.”
This week, the People’s Bank of China (PBOC) privately urged financial institutions and payment companies to restrict its customers’ access to bitcoin exchanges. This news caused the price of bitcoin to drop by around $40 – the value of bitcoin is currently trading at roughly $450 at the time of this writing.
