MOSCOW, August 16 (RIA Novosti) – The price of Bitcoin has dropped sharply over the past week, breaking a three month period of relative stability. As of this morning, the virtual currency was trading at three month lows of $484, almost a 20 percent decline since August 10.
The decline in price has been attributed by the Wall Street Journal to a report published by the Consumer Financial Protection Bureau (CFPB) highlighting risks associated with the virtual currency. The CFPB notes that while virtual currencies “offer the potential for innovation, a lot of big issues have yet to be resolved – some of which are critical.”
The CFPB highlights four risks which consumers can face using virtual currencies. First, they are prime targets for hackers. Most notably, the Japanese MT. Gox, once largest Bitcoin exchange, lost 850,000 of their customer’s coins, approximately 450 million dollars at the time, to theft in April of 2014. Second, exchange rates and bid/offer spreads can actually cost the consumer more than they would have paid regularly. Third, because the currency is still in its early phase, there are many websites and people trying to dupe those people would easily be defrauded. Lastly, if the company holding your bitcoins is hacked and your coins are stolen, there is no recourse to funds as if you were using a debit or credit card.
In addition to these warnings, the CFPB is also starting to accept complaints from consumers about specific virtual currency related products or services. The CFPB says that they will use “the information to enforce federal consumer financial laws and, if appropriate, take policy steps.”
The current regulatory view of the US government treats Bitcoins and all other virtual currencies as property, and thus subject to capital gains tax and other regulatory requirements which some say make it burdensome and unattractive to consumers and business.