Massachusetts to Issue 'Consumer Advisory' for Bitcoin in Coming Weeks

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Published February 28, 2014

| FOXBusiness

Closing out a brutal week for Bitcoin, consumer watchdogs in Massachusetts said Friday they will issue an advisory on the embattled currency in the coming weeks.

The Massachusetts Office of Consumer Affairs and Business Regulation confirmed that it will be issuing a consumer advisory that will likely touch on the digital cryptocurrency’s volatility, lack of legal rights compared with a credit card and the lack of protection against stolen bitcoins.

This comes hours after Mt. Gox, once the largest Bitcoin exchange, confirmed that it lost nearly $500 million worth of bitcoins in a recent heist that marks one of the worst bank thefts in history.

The exchange blamed the heist on a “system weakness” that it said opened up the exchange to fraudulent withdrawals. While it has filed for bankruptcy protection, it remains to seen whether investors will ever see that money.

Bitcoins are virtually impossible to trace, and the currency is not regulated, which means it does not carry the same consumer protection rights as other payment forms, such as credit cards. 

The Massachusetts alert was first reported by MarketWatch, which cited Undersecretary Barbara Anthony as saying the state needs to “impress upon consumers that you do take risk” when buying, selling and using Bitcoin.

While the currency has come under criticism this week amid the Mt. Gox troubles, rival exchanges, including Bitstamp and BITC-e.com, now the first and second largest exchanges in operation, continue to reassure customers that their funds are safe.

Bitcoin prices mostly recently sat at $572, down from $586 on Thursday down sharply from record highs of $1,200 in December. The currency is notoriously volatile. 

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