CFPB creates complaint center for bitcoin 'Wild West'
Consumers who encounter problems or fraud when using bitcoin have a new place to lodge a complaint: the Consumer Financial Protection Bureau.
The federal agency on Monday issued new warnings about the risks of using the nascent virtual currency, which is still subject to relatively loose regulation and is not backed by any central authority. The CFPB is urging consumers to be wary of wide fluctuations in bitcoin exchange rates, potential hacking, theft and stolen funds.
"Virtual currencies are not backed by any government or central bank, and at this point consumers are stepping into the Wild West when they engage in the market," CFPB Director Richard Cordray said in a statement.
The move follows a growing effort to cast a regulatory net over the world of virtual currencies. Last month, New York state proposed new regulations for firms that deal in cryptocurrencies.
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Although wildly popular among alternative currency enthusiasts, bitcoin has endured several high profile setbacks, including the implosion of the Mt.Gox exchange. Additionally, critics have argued that virtual currency is susceptible to fraud and illegal transactions, while others doubt it can serve as a long-term store of value.
In response to the growing risks surrounding the use of virtual currencies, the agency is creating a complaint center for bitcoin.
"The CFPB will send the complaint to the appropriate company, and will work to get a response. If the complaint is about an issue outside the CFPB's jurisdiction, the CFPB will forward the complaint to the appropriate federal or state regulator," the agency said. "Importantly, the CFPB will use all complaints to better understand the virtual currency market and its effect on consumers."
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—By CNBC.com