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It pays to know what's in your e-Wallet
AG Gansler and Financial Regulation Commissioner Kaufman emphasize consumer caution with virtual currencies such as Bitcoin

Baltimore, MD (April 29, 2014) - Attorney General Douglas F. Gansler and Commissioner of Financial Regulation Mark Kaufman today underscored the need for consumer and investor caution when dealing with virtual currency, such as Bitcoin. Virtual currency, which includes digital and crypto-currency, is gaining in popularity and controversy. Growing numbers of merchants, businesses and other organizations now accept Bitcoin, one example of crypto-currency, in lieu of traditional currency.

"Virtual currencies exist with little to no regulation and there is no safety net, such as federally-backed insurance, if you lose your hard-earned money," said Attorney General Gansler. "It pays to know what's in your e-Wallet and the many ways your money can disappear if you're not careful. Unlike the dollar, these highly volatile alternatives are not issued by a government authority and are typically not backed by tangible assets."

"Bitcoin and all virtual currencies have inherent risks that Marylanders should consider prior to transacting with or investing in these currencies," said Mark Kaufman, Commissioner of Financial Regulation. "The entities that accept and transmit, or exchange virtual currencies for U.S. dollars are subject to federal law, and may be subject to state law, including the requirement to be licensed as a money transmitter. It is important to note however, that Maryland does not currently regulate virtual currencies. I encourage any Maryland resident interested in virtual currencies, to do their homework first."

The Attorney General's Securities Division is posting consumer advice online at:

The Office of the Commissioner of Financial Regulations also has made its Advisory Notice available online by visiting

Virtual currency is an electronic medium of exchange that can be bought or sold through virtual currency exchanges and used to purchase goods or services where accepted. These currencies are stored in an electronic wallet, also known as an e-Wallet, which is a digital system that allows payments online via a computer or mobile device.

Recently, one of the largest Bitcoin exchanges, MtGox, shut down after claiming to be the victim of hackers and losing more than $350 million of virtual currency. Despite the controversy, virtual currency may find its way into your e-Wallet.

Capitalizing on the interest in virtual currencies, many investments are now available that own or are tied to the value of the currency. According to the recent consumer alert, before investing in any offering for a financial product containing virtual currency, investors should consider these risk factors:

  • Virtual currency is subject to minimal regulation, susceptible to cyber-attacks and there may be no recourse should the virtual currency disappear.
  • Virtual currency accounts are not insured by the Federal Deposit Insurance Corporation (FDIC), which insures regular bank deposits up to $250,000.
  • Investments tied to virtual currency may be unsuitable for most investors because of currency's volatility.
  • Investors in virtual currency will be highly reliant upon unregulated companies that may lack appropriate internal controls and may be more susceptible to fraud and theft than regulated financial institutions.
  • Investors will have to rely upon the strength of their own computer security systems, as well as security systems provided by third parties, to protect their e-Wallets from theft.

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Financial Regulation
Mark Kaufman, Commissioner

Maureen O'Connor, 410.230.6241






Attorney General of Maryland 1 (888) 743-0023 toll-free / TDD: (410) 576-6372
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