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Regulators Urge Caution as Bitcoin Fever Reaches Alaska

Last Updated March 4, 2021 5:03 PM
Josiah Wilmoth
Last Updated March 4, 2021 5:03 PM

Bitcoin fever is spreading around the globe at an unprecedented pace, and it has caught the attention of regulators in locales not normally thought of as major tech hubs — including the “Last Frontier.”

This week, regulators in both Idaho and Alaska issued notices cautioning residents about the risks associated with purchasing cryptocurrencies as investments.

Echoing sentiments issued in the past by other regulatory agencies, the Idaho Department of Finance said that investors often get caught up in a fervor surrounding a rapidly-appreciating asset but do not pause to consider the potential for fraud and wild price fluctuations.

“Investors should go beyond the headlines and hype to understand the risks associated with investments in cryptocurrencies, as well as cryptocurrency futures contracts and other financial products where these virtual currencies are linked in some way to the underlying investment,” said Gavin Gee, director of the Department of Finance.

“I think the technology is very exciting and it’s going to have a lot of uses across a lot of industries,” added Jim Burns, Idaho’s Securities Bureau chief, in an interview with a local media station. “Now as to virtual currencies and stores of value, I’m a little more suspicious relative to that because we are not seeing the adoption for everyday uses, like at the grocery store. People do accept it, but until you get very, very broad acceptance you’re not going to see it used as a currency very regularly.”

Bitcoin fever has not just reached Idaho, though, it has also extended to Alaska — a state known as “The Last Frontier.”

Although Alaska might not immediately seem like a hotbed for bitcoin adoption, Overstock — one of the most high-profile companies to accept cryptocurrency payments — said in November  that Alaskan residents made cryptocurrency payments at a higher rate that than residents of any other US state.

Kevin Anselm, director of Alaska’s Division of Banking and Securities, said that the division decided to issue a warning after hearing anecdotal reports of brokers contacting state residents to attempt to convince them to contribute to initial coin offerings (ICOs).

“We’re seeing a number of people contacted by sellers of virtual currencies or sellers that want people to get in on initial coin offerings, including virtual currencies,” Anselm told Alaska Public Media .

The securities regulators said that it was important for investors to push back against sales pitches by asking questions to discern the exact nature of investment products, particularly when they involve nascent assets like bitcoin.

“We just want people to know these aren’t a typical investment,” Anselm added.

Write to Josiah Wilmoth at josiah.wilmoth(at)CCN.com.

Featured image from Shutterstock.