Commonwealth Secretary William F. Galvin, Massachusetts' top securities regulator, is warning investors in his state and beyond not to get caught up in Bitcoin speculation.
"Bitcoin is just the latest in a history of speculative bubbles that most often burst, leaving the average investors with a worthless product," Secretary Galvin said in a statement. "Going back to the 1600s with tulip mania to the present Bitcoin craze, chasing the next best thing will, more often than not, end in disaster for the average investor."
Bitcoin futures began trading on the Chicago Board Options Exchange (Cboe) earlier this week. Proceeds from initial coin offerings have surpassed $4 billion this year, Bloomberg News reported Wednesday.
According to Galvin's office, Bitcoin has "been the target of major hacks at the exchange and wallet levels, leaving many Bitcoin holders with huge losses."
Bitcoin futures expiring in January were 18% higher and traded at $17,710 as of 12:25 p.m. in New York on Monday. That was up from an opening level of $15,000, on 3,561 contracts traded during their debut, according to the exchange.
As of Thursday at noon, the January futures traded at $16,610.
Trading on the exchange "gives Bitcoin an air of legitimacy," the regulator's office says; however, there are "inherent risks" associated with investing in the cryptocurrency and "fraudulent schemes associated with it."
Bitcoin, of course, is attracting media attention as its price swings up and down.
Late Monday, Securities and Exchange Commission Chairman Jay Clayton issued a warning to investors and advisors about the cryptocurrency and ICO markets. "To date, no initial coin offerings have been registered with the SEC," Clayton said in a statement.
Galvin's Warning List
Before buying Bitcoin or assets associated with it, Galvin's office suggests investors carefully consider the following facts and suggestions:
