Want to buy Bitcoin? Do your homework first: B.C. regulators

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WATCH: Worth more than gold, could Bitcoin go mainstream? – Sep 22, 2017

If you’re considering dipping your toe into the world of cryptocurrencies like Bitcoin, the agency charged with regulating B.C.’s markets has a message: do your homework.

That’s because the BC Securities Commission (BCSC), which watches over the province’s financial markets, says it has little control over the digital currency.

Speaking with John Daly on CKNW’s Back on the Beat, director of capital markets regulation Mark Wang said Bitcoin and its cousins are something of a grey area for the BCSC.

READ MORE: Bitcoin tax scam defrauded more than 40 in York Region: police

The problem is that some cryptocurrencies act like commodities — say, gold or copper — which the BCSC won’t touch.

Others, like those that make “initial coin offerings” that work more like shares in a company, complete with profit participation rights are on the agency’s radar.

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“The challenge is there’s actually a lot of things that fall in the middle of that spectrum that become a lot more difficult in terms of evaluating whether or not cryptocurrency is a security and whether or not we have jurisdiction,” said Wang.

That can create an investment landscape that is anything but clear to an inexperienced investor.

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In such a market, Wang said it’s crucial for would-be buyers to be careful.

“Start with your own due diligence and bring a healthy skepticism and ask questions,” he said.

“That’s really the fundamental starting point. With all purchases of investments, people should be doing their due diligence. They should be reading about the investment.”

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Wang said people considering buying cryptocurrencies like Bitcoin or Ethereum can find plenty of information online, but should also consider talking to an expert, such as an investment adviser, lawyer, or accountant for help.

READ MORE: Russian hacker accused of $4B bitcoin fraud to be extradited to U.S.

Bitcoin has once again been making headlines after a meteoric rise in recent weeks, more than doubling in value from about C$3,300 to close to C$10,000.

But it has also been at the centre of a string of recent scams.

In many cases, con artists have found ways to trick the public into believing they are police officers or representatives from the Canada Revenue Agency (CRA).

The victims are then scammed into sending Bitcoins to anonymous accounts — money that can’t be recovered because cryptocurrencies are untraceable.