Attention all Wisconsin residents: be aware of bitcoin and other virtual currencies.
That is what financial regulators in the Badger State have said in the latest investor and consumer alert from a state government, the latest trend over the past month for many states in the country regarding bitcoin.
According to the Wisconsin Department of Financial Institutions Consumers – in collaboration with Conference of State Bank Supervisors (CSBS) and the North American Securities Administrators Association (NASAA) – individuals and parties considering investing in the peer-to-peer decentralized digital currencies could potentially be violating the law.
The state department also warned that each investor must handle their own security for their holdings because the virtual currency is not backed by any government and numerous bitcoin exchanges and digital wallets have been breached, which has resulted in hefty thefts and losses.
“These alternative currencies – unlike traditional currencies – are not backed by tangible assets, are not issued by a governmental authority and are subject to little or no regulation,” said DFI Secretary Peter Bildsten in a statement. “The value of virtual currencies is highly volatile and the concept behind the currency is difficult to understand even for sophisticated financial experts. Investor s should be aware that investments that incorporate virtual currency present very real risks.”
It listed a number of facts that it has compiled that investors should be aware of: businesses dealing with digital currencies may not be regulated, the FDIC does not insure bitcoins, the IRS will treat the virtual currency as a property and bitcoins and others like it are volatile, susceptible to theft and have been connected to illicit transactions.
Wisconsin consumers who have any questions regarding cryptocurrencies are encouraged to contact DFI Communications Director George Althoff (george. althoff@wisconsin.gov or 608 – 261 – 4504)
This isn’t the first time that Wisconsin has generated headlines pertaining to bitcoin.
In March, there were conflicting reports that the Wisconsin Government Accountability Board (GAB) was mulling permitting state political campaigns to accept bitcoin contributions. It was later discovered that there was some miscommunication and that GAB had no plans to allow voters to donate to political campaigns using bitcoins and other virtual currencies.
State Regulators and Bitcoin
As previously noted, there has been an influx of state guidance advisories and regarding bitcoins. The Idaho Finance Department vented its concerns over bitcoins, while Missouri, Nevada, Tennessee have also posted alerts to bring residents and investors’ attention to the growing popularity of the cryptocurrency industry.
“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,” Missouri Secretary of State Jason 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.”
Over the past several months, federal governments and central banks – Russia, France, the United Kingdom, Canada, Singapore – have published consumer alerts highlighting the hazards affiliated with bitcoin, litecoin, dogecoin and other alternative currencies.
