|By Virginia Watson | 3 years ago|
In the past several months, Bitcoin has been all over the news and is popular with people who deem it valuable. However, many people in the financial sector are skeptical of cryptocurrency and are warning of the potential risks of investing.
According to The Guardian, UBS Chairman Axel Weber, stated that that bitcoin and other cryptocurrencies were speculative, risky and “not an investment we would advise.”
Billionaire investor Warren Buffett, who said he would never invest in cryptocurrency despite Bitcoin’s nearly 2,000% rise in 2017.
Ernst & Young, also warned against investing in initial coin offerings (ICOs), which offer cryptocurrency tokens to raise funds because they are at risk of cybercrime. The Guardian stated that of the 372 ICOs analyzed, raising a total of $3.7 billion, roughly $400 million had been stolen by hackers, who were taking up to $1.5million in ICO proceeds per month.
Chair of the US Securities and Exchange Commission, Jay Clayton, also stated that the agency had seen “disturbing” evidence that investors in ICOs had been counselled that they did not need to comply with federal securities law.
“I have instructed the SEC staff to be on high alert for approaches to ICOs that may be contrary to the spirit of our securities laws and the professional obligations of the US securities bar,” stated Clayton.
Due to the vast price fluctuations of Bitcoin, many governments around the world have made statements that cryptocurrency regulations will be a part of the future.
However, the hype and popularity, has also caused concern, as many companies aimed to take advantage of investor excitement surrounding blockchain technology. According to The Guardian, this has led to the SEC to issue a statement that they would closely watch companies that capitalize on the popularity.
“The SEC is looking closely at the disclosures of public companies that shift their business models to capitalise on the perceived promise of distributed ledger technology and whether the disclosures comply with the securities laws, particularly in the case of an offering,” stated Clayton.