California Department of Business Oversight Issues Advisory on Virtual Currencies

Apr 30, 2014

Download this press release (PDF)

SACRAMENTO, CA (April 30, 2014) – The California Department of Business Oversight has issued an
advisory regarding the risks associated with virtual currencies, also known as crypto-currencies, virtual
money, or digital cash.

“Virtual currencies have piqued the interest of many consumers and investors, while at the same time
raising concerns about risks among regulators and consumer advocates,” said Commissioner of Business
Oversight Jan Lynn Owen. “While the Department determines whether virtual currency exchanges fit into a
traditional currency regulatory framework, this advisory provides important warnings.”

The document provides advice to consumers and investors on the risks of using or investing in virtual
currencies, including:
 Virtual currency exchanges are unregulated and transactions are considered high-risk due to the
vulnerability of exchanges to cyber-attacks.
 Some virtual currencies have been associated with criminal enterprises and the potential for
investment loss is significant.

In February 2014, Commissioner Owen from California was asked to join the Conference of State Bank
Supervisors (CSBS) Emerging Payments Task Force, made up of nine state banking regulators. The Task
Force will study changes in payment systems to determine the potential impact of emerging technology in
financial services on consumer protection, state law, and banks and non-bank entities chartered or licensed
by the states.

The consumer advisory on virtual currency may be viewed at
http://www.dbo.ca.gov/Consumers/Advisories/Virtual_Currencies_0414.pdf. Consumers are encouraged
to thoroughly research any and all investment opportunities before making a transaction.
On July 1, 2013, the Department of Corporations and the Department of Financial Institutions merged to become the
Department of Business Oversight. California consumers should contact the Department of Business Oversight to
check on the licensing and standing of the companies, investments or other financial services they are considering at
www.dbo.ca.gov or by calling 1-866-275-2677.

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