Michigan Attorney General Warns About Bitcoin Being ‘Real-Life Risk’ for Investors

Bill Schuette, Michigan Attorney General, says investors and consumers should educate themselves on the use of bitcoins before purchasing them .

Photo: juriyrus/Flickr

Photo: juriyrus/Flickr

Michigan Attorney General Bill Schuette’s office has released a range of advices regarding the cryptocurrency, saying they pose “real-life risk” and suggesting users to learn more about digital currency including bitcoin before purchasing or using them.

The similar advices were released by other state agencies, most of them were published in the past six months. The warnings include price volatility, tax considerations and the broader risks that consumers face when spending on the Internet.

Mr. Schuette stated that digital currencies need to be used carefully by the ones who uninformed, pointing out that education is a key step for anyone whether it is an investor or consumer to get involved in bitcoin industry.

Bill Schuette specified:

“Virtual currency does not have the same safeguards as hard currency. I advise all Michigan citizens to educate themselves prior to putting their hard-earned dollars into a virtual wallet.”

The notice from the Michigan attorney general’s office states that bitcoin is not a “real currency”, and as a matter of fact, clients should treat digital currencies as a type of investment.

The advisory means taking the needed steps to protect cryptocurrency holdings, as they under the risk of malware attacks that can eventually lead to loss and theft. Moreover attorney general’s office advised that consumers should not buy more than they are willing to lose, as there is a risk o price volatility.

The notice mentions:

“Before purchasing any virtual currency or otherwise jumping on the virtual currency bandwagon, educate yourself so you can make an informed decision about what you are getting into. Virtual currency carries a significant amount of real-life risk.”

Additionally, the sate and federal regulators in the US have issued warnings on bitcoin. Moreover, the notice from the Michigan attorney general’s office shows the same concerns previously announced to the public.

In May this year, the Securities and Exchange Commission issued a warning stating that quick price movements and a lack of centralized consumer protections may be risky for those who use digital currency. Additionally, the agency said that bitcoin has “the potential to give rise both to frauds and high-risk investment opportunities”.

In June, the Government Accountability Office (GAO) asked a a number of federal regulators to take a closer look at bitcoin and other digital currencies. Precisely, the GAO asked to conduct more interagency cooperation on digital currencies. However, the Consumer Financial Protection Bureau later replied that in the future all the advisories on bitcoin would be developed in conjunction with other parts of the federal government.

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