US CFPB To Start Accepting Consumer Complaints Against Bitcoin Violations

The U.S. Consumer Financial Protection Bureau (CFPB) announced Monday that it will start accepting consumer complaints regarding Bitcoin usage violations and highlighted several dangers linked to using virtual currencies like Bitcoin, Dogecoin and XRP.

The consumer watchdog warned of guarding against potential hackers and schemers who could swindle their way into an individual's finances.

"Virtual currencies may have potential benefits but consumers need to be cautious and they need to be asking the right questions," Richard Cordray, the director of the bureau, said in a statement.

"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," he added.

In the advisory, the CFPB warned against a virtual currency's volatile exchange rates and unclear costs. They also asserted that since there is hardly any government involvement in the currency, they can pose serious security threats. The agency also said that once stolen funds -through virtual currencies - cannot be refunded by the company.

Explaining how it will deal with consumer complaints, the CFPB said:

"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. Importantly, the CFPB will use all complaints to better understand the virtual currency market and its effect on consumers. The CFPB will also use the complaints to help enforce federal consumer financial laws and, if appropriate, take consumer protection policy steps."

Experts have lauded CFPB's decision to accept complaints.

"This is positive for consumers. For virtual currencies, the average consumer doesn't really know how to protect themselves, and they really cannot protect themselves," Mercedes Tunstall, a partner at Ballard Spahr, the law firm told the New York Times.

The CFPB is the second U.S. federal agency to voice concerns over Bitcoin usage. Earlier this year, The U.S. Internal Revenue Service (IRS) revealed that Bitcoin will be taxable and will be treated as "property" instead of "currency."

Since its conception in 2009, Bitcoins has had trouble being accepted by the public. Things got rockier for the currency after it was revealed in October 2013 that it was being used for illegal transactions on Silk Road, the online black market.

Currently, one Bitcoin is worth $567. It had reached a value of $1151 in December 2013. Check out the Bitcoin value in your currency, here.