European financial watchdogs have sounded the alarm over the risks consumers run by using virtual currencies such as Bitcoin, which has fluctuated between $340 and $1,240 in the past week.
The European Banking Authority will on Friday issue a statement warning of the risk of "violent fluctuations in electronic currencies" value, the danger of "digital wallets" being hacked, and of the lack of legal protections for users.
(Read more: Big bitcoin: Wall St., Silicon Valley take notice)
The move comes as authorities worldwide try to get to grips with the rapid expansion and soaring value of unregulated cyber currencies.
The People's Bank of China this month ruled that Chinese banks should not process or insure Bitcoin transactions , in a step towards regulatory oversight of a currency that has exploded in popularity – and in value – in recent months.
Other central banks have been more positive, with Ben Bernanke, the US Federal Reserve chairman, last month arguing they can be useful if money laundering can be prevented.