Pennsylvania Banking and Securities Department Urges Consumers, Businesses and Investors to be Cautious with New Virtual Currencies
HARRISBURG, Pa., May 19, 2014 /PRNewswire-USNewswire/ -- The Pennsylvania Department of Banking and Securities is urging consumers, businesses and investors to consider the risks if they intend to use or invest in virtual currencies, including cryptocurrencies such as bitcoin or litecoin.
Virtual currency is an electronic medium of exchange. Virtual currencies can be purchased, sold and exchanged with other types of virtual currencies or real currencies, like the U.S. dollar. This can happen through various mechanisms such as exchangers, administrators or merchants that are willing to accept virtual currencies in lieu of real currency.
"These virtual currencies – unlike U.S. dollars – are not backed by tangible assets or the full faith and credit of the U.S. government, and currently are subject to little or no regulation in any country," said Secretary of Banking and Securities Glenn E. Moyer. "In addition, we have seen that the value of virtual currencies is highly volatile and the very concepts underlying these currencies are still being debated by financial and legal experts."
Consumers, businesses and investors may additionally consider the following before investing in a virtual currency:
- The Internal Revenue Service has declared that virtual currency will be treated as property and not as currency, and transactions therefore may be subject to certain taxes under IRS code.
- Virtual currencies can be stolen or otherwise subject to cybercrime.
- Virtual currency accounts are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration, which insure bank and credit union deposit accounts up to $250,000.
This advisory has been issued in conjunction with the Conference of State Bank Supervisors and the North American Securities Administrators Association. More information about virtual currencies may be found on their respective websites, www.csbs.org and www.nasaa.org.
Consumers and investors can make inquiries or file a complaint against any company or individual regulated or licensed by the Department of Banking and Securities online (www.dobs.state.pa.us) or by calling 1-800-PA-BANKS (800-722-2657).
Media contact: Ed Novak, 717-783-4721
SOURCE Pennsylvania Department of Banking and Securities