Connecticut Bank Regulator Warns Consumers of Bitcoin Risks

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Connecticut's top banking regulator on Monday warned investors about the dangers of bitcoin.

The Connecticut Department of Banking issued a consumer advisory urging consumers to consider the risks associated with purchasing and trading the virtual currency.

"Unlike traditional currency, these alternatives typically are not backed by tangible assets, are not issued by a governmental authority and are subject to little or no regulation," said Commissioner Howard Pitkin in a press release.

The state regulator pointed to bitcoin's volatility, citing wide swings in its value from $100 in July 2013 to over $1,100 in December 2013. The currency now trades at just above $400.

The advisory, which also pointed to the recent collapse of the Mt. Gox exchange in Japan, cautioned that the digital currency lacks the regulatory protections that come with traditional investments.

"Individuals should aware that using or investing in virtual currency presents very real risks, including a total loss of value," Pitkin said.

Kristin Broughton

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