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Iowa insurance regulator calls Bitcoin volatile, 'high-risk'

Insurance Commissioner Doug Ommen issues a warning about cryptocurrencies

Doug Ommen, insurance commissioner for the Iowa Insurance Division, speaks on a panel about affordability and access in health care at the Iowa Ideas conference at the DoubleTree by Hilton hotel in Cedar Rapids on Friday, Sept. 22, 2017. Over 200 speakers and 600 attendees gathered to discuss the ideas affecting Iowans across various disciplines. (Rebecca F. Miller/The Gazette)
Doug Ommen, insurance commissioner for the Iowa Insurance Division, speaks on a panel about affordability and access in health care at the Iowa Ideas conference at the DoubleTree by Hilton hotel in Cedar Rapids on Friday, Sept. 22, 2017. Over 200 speakers and 600 attendees gathered to discuss the ideas affecting Iowans across various disciplines. (Rebecca F. Miller/The Gazette)

As the value of Bitcoin has jumped to new highs, Iowa’s top securities regulator wants Iowans to take caution before they invest in cryptocurrencies like it.

“Investing in cryptocurrencies is not for the faint of heart as prices have been highly volatile and can easily tempt unsuspecting investors to rush into an investment they may not fully understand, including the transaction costs they will incur,” Iowa Insurance Commissioner Doug Ommen said in a warning published Thursday.

Ommen said Iowans interested in cryptocurrencies such as Bitcoin and Litecoin need to do their homework first.

Unlike traditional money, cryptocurrencies don’t have a physical form and are not insured by a central bank or the government. Ommen said that’s one reason Iowans should be cautious before they invest.

He called cryptocurrencies and associated investments “high-risk products with an unproven track record” and a high risk for fraud.

Supporters of Bitcoin and the technology behind it have said it can provide a new type of payment system, one that isn’t tied to government forces and traditional banks.

They also advocate Bitcoin’s use of the blockchain — a type of digital ledger that records transactions on every computer connected to the system — makes transactions accountable.

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The value of Bitcoin has been extremely volatile in recent months, particularly in the latter part of 2017. Prices for Bitcoin started at under $5,000 in October, but bounced to highs of almost $20,000 and lows of about $12,600 in November and December.

A year ago, the price of a Bitcoin was about $900. On Friday, it was more than $16,000.

The Insurance Division also provided a warning list of items for consumers to look for if they’re worried about investment fraud. The “red flags” include “guaranteed” high investment returns, unsolicited offers, pressure to buy into an investment immediately and solicitation by unlicensed sellers.

l Comments: (319) 398-8366; matthew.patane@thegazette.com

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