California’s Department of Business Oversight recently published a consumer advisory on virtual currencies, “What You Should Know about Virtual Currencies.” The advisory includes a brief description of virtual currencies and elaborates on the risks of using and investing in them. It specifically mentions the Mt. Gox bankruptcy and includes the other risks, such as the lack of consumer protections and recourse if Bitcoins are lost or stolen, fluctuations in value and possible use for criminal activities. The advisory also lists resources, including links to the recent guidance from the IRS and FinCEN.
This is another example of virtual currency advisories from both federal and state regulators that highlight the uncertainties associated with Bitcoin.
More information may be found here.