SEC issues warning about bitcoin investments
The SEC is urging investors to proceed with caution when evaluating
potential investments related to bitcoin.
Bitcoin-related investment opportunities may come with a heightened
risk of fraud, the SEC warned in an investor
alert issued Wednesday.
In the alert, the SEC said the rise of bitcoin and other virtual and
digital currencies creates new concerns for investors. New products,
technologies, or innovations such as bitcoin may give rise to frauds
and high-risk investment opportunities, according to the SEC.
Investors may find it difficult to resist promises of high investment
returns that fraudsters may make related to bitcoin, the SEC said. The
SEC suggests that investors consider the following risks when
evaluating investments involving bitcoin:
The SEC also warned investors of the following potential signs
of investment fraud:
The IRS is
treating virtual currencies such as bitcoin as property for
federal tax purposes, according to recently issued guidance. As a
result, virtual currency is subject to the general tax principles that
apply to property transactions.
Ken Tysiac (
) is a JofA senior editor.
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