The U.S. Securities and Exchange Commission (SEC) doesn’t appear to be bitcoin’s biggest fan. Today, the government agency published a long list of potential risks that bitcoin presents, and it’s quite the document.
After saying that bitcoin is “used like money,” the SEC goes on to point out that the IRS “recently issued guidance stating that it will treat virtual currencies, such as bitcoin, as property for federal tax purposes.” Shade.
The SEC also noted that “Government Regulation” could be an investment risk for the cryptocurrency: “Bitcoins are not legal tender. Federal, state or foreign governments may restrict the use and exchange of bitcoin.” Shade.
Most of the SEC’s points apply to anything: Be wary of high-pressure sales pitches, unlicensed vendors and the like. Some, on the other hand, are very specific to bitcoin itself. The SEC directly mentions Mt.Gox:
Bitcoin exchange in Japan called Mt. Gox recently failed after hackers apparently stole bitcoins worth hundreds of millions of dollars from the exchange. Mt. Gox subsequently filed for bankruptcy. Many Bitcoin users participating on the exchange are left with little recourse.
It’s worth noting that the SEC largely appears to understand the risks that bitcoin amply presents to investors. Sean Percival, a venture capitalist with a taste for bitcoin, has a slightly different spin on the release:
Both parties here are correct. It’s in the amply swinging markets that we find the real spark. Warren Buffett, after all, wouldn’t make very good television without the billions.
ILLUSTRATION BY BRYCE DURBIN
IMAGE BY Bryce Durbin