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Alert - Bitcoin virtual currency

Wednesday, February 05, 2014

Montréal – The Autorité des marchés financiers ("AMF") is cautioning Quebeckers about the introduction of the first dispensing machine for virtual currency, such as Bitcoin, at certain businesses in Québec.

The AMF stresses that transactions involving virtual currency, also known as cryptocurrency, are not covered by the financial services compensation fund or the deposit insurance fund. Quebeckers should therefore be careful with virtual currency transactions as they may incur losses that are not covered under current compensation or deposit insurance plans.

The AMF is closely monitoring the introduction of virtual currency in Québec in terms of the Securities Act, the Derivatives Act and the Money-Services Businesses Act. The AMF will take action in the event of violations under any of these statutes.

Virtual currency and fraud risks
Various regulators and central banks, including the U.S. Securities and Exchange Commission and Banque de France, recently warned consumers about the risks of fraud related to virtual currency.

The anonymity of virtual currency transactions and their relatively low costs may entice fraudsters to set up Ponzi and other schemes to lure investors. Virtual currency may be used to facilitate fraudulent transactions or simply fabricate fraudulent investments. This type of fraud may involve unregistered on-line offering or trading platforms.

The Autorité des marchés financiers ("AMF") is the regulatory and oversight body for Québec's financial sector.

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