EBA issues warning against Bitcoin trade

Cyber theft and fraud are two main concerns surrounding the meteoric rise of the digital currency

The rise of Bitcoin has been a source of both befuddlement and promise from tech entrepreneurs and investors alike. Bitcoins run at high-risk, but also at high-yield if the last several months of its soaring value are any indication. But in the same vein, as the interest in Bitcoin's digital origin and its meteoric rise to the forefront of mainstream consumerism has financial investors' attention -- including the famed Winklevoss twins -- it also has many leery of how sustainable a purely digital currency can be, especially with cyber theft a real concern.  

Bitcoin's birth is now the stuff of legend; rooted in the mysterious code-mining computer of someone only known as Satoshi Nakamoto, it's now skyrocketed in popularity having just raised $65 million in the last two months' round of funding. Naturally, this has regulatory bodies with their heads in their hands. China's banned Bitcoin transactions through financial institutions. The European Banking Authority has been the latest to issue warnings against the risk of fraud and theft associated with the digital currency. 

The EBA counsels any buyers and traders of Bitcoin to "exercise the same caution with your digital wallet as you would with your conventional wallet or purse." Yet those who now have stakes in the value of the currency -- which includes some big names from Silicon Valley -- claim proper regulation is in order. 

Creating a legal set of parameters for trading a currency based in software with no centralized governing body sounds like a regulatory nightmare, especially taking taxation into account. So any government seriously considering Bitcoin as a legitimate source of trade has its work cut out. But many think it may even be too late as Bitcoin is now used in such pedestrian transactions as buying a beer in Canada. For those wise enough to get their hands on some Bitcoins before 2013, the new world of decentralized currency is at hand.

 

For further reading:

Regulators set sights on Bitcoin

Bitcoin hearing positive for the digital currency

Contributing Author

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Juliana Kenny

Juliana Kenny is a contributor to InsideCounsel.com, covering a range of topics including patent litigation, conflict mineral laws, executive compensation, and antitrust regulation. Juliana earned B.A.s...

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