Massachusetts officials said they are keeping a close watch on the growing bitcoin craze.
Massachusetts Secretary of State William Galvin said his office will be aggressively policing bitcoin sellers in an effort to keep buyers from getting scammed.
He announced Friday that the Massachusetts Securities Division will begin a sweep of entities based in the state that are raising money from initial coin offerings.
"With the current frenzy over bitcoin and all the accompanying hype, ICOs are fodder for scam artists trying to capitalize on the craze," Galvin said in a statement. "No one regulator can police this marketplace. My Securities Division intends to patrol these offerings to proactively prevent investor harm."
Bitcoin was created in hopes it would become a new kind of currency that people could use outside of the traditional banking system, without backing from any country or central bank. It was also supposed to operate outside of government oversight, which has raised concerns that it will be a haven for criminals.
Unlike traditional currencies, bitcoin doesn't have a country backing it, a central bank, interest rates, or a long history of exchange rates against other currencies, making it extremely difficult to place a value on. Its value is tied only to what people believe it's worth at any given time.
Despite the growing interest, bitcoin still is not widely accepted in stores to buy merchandise, and you can't deposit it at a bank. One of the problems with using it as a currency is that its value keeps bouncing around, sometimes very suddenly.
Earlier this week, Galvin issued a warning telling people not to get caught up in bitcoin speculation.
"Bitcoin is just the latest in a history of speculative bubbles that most often burst, leaving the average investors with a worthless product," he said. "Going back to the 1600s with tulip mania to the present bitcoin craze, chasing the next best thing will, more often than not, end in disaster for the average investor."
Anyone wishing to check the registration status of someone offering to sell bitcoin or other products tied to bitcoin can contact the Secretary of State's Securities Division at 1-800-269-5428. Additional information can also be found at www.sec.state.ma.us.