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FINRA Trash-Talks Bitcoin In A Scary Investor Alert

FINRA Trash-Talks Bitcoin In A Scary Investor Alert
Tech1 min read

An investor alert from the Financial Industry Regulatory Authority (FINRA) titled "Bitcoin: More Than A Bit Risky" paints the currency as a shady and troubled speculative vehicle ultimately doomed to fail.

For example:

Bitcoin use is limited to businesses and individuals that are willing to accept bitcoins. If no one accepts bitcoins, bitcoins will become worthless ... Platforms that buy and sell bitcoins can be hacked, and some have failed ... Unlike US banks and credit unions that provide certain guarantees of safety to depositors, there are no such safeguards provided to digital wallets ... In part because of the anonymity Bitcoin offers, it has been used in illegal activity, including drug dealing, money laundering and other forms of illegal commerce.

This is just a small portion of the alert, but FINRA's stance is clear: avoid Bitcoin. This is basically what one would expect it to say - Bitcoin is still very volatile and the currency is still in its nascent phases.

Brett Stapper of Falcon Global Capital has composed an open letter to FINRA in response, hoping to clarify some confusing issues. He writes:

It is important for investors to understand the difference between Bitcoin the technology, bitcoin the currency, and, Bitcoin companies. Bitcoin is a technology that bitcoin the currency is built on. Bitcoin companies simply operate within this set of protocols. Just like the internet isn't to blame when a website is fraudulent, it is not fair or logical to blame Bitcoin the technology or bitcoin the currency when a private company operates unethically.

It's a comparison Stapper's made before. If Gmail goes down, we don't panic at "The End Of Email." Similarly, when Mt. Gox filed for bankruptcy, it shouldn't signal the "end" of Bitcoin.

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