The Central Bank of Cyprus (CBC) warned on Friday over risks related to virtual currencies such as Bitcoin, saying that it is not a legal tender.
“The CBC does not authorise any activity falling within its mandate unless legal compliance is ensured. Any activity without the required license is liable for breach of law” says an announcement by CBC.
CBC warns the public of the fact that there are no specific regulatory protection measures to cover losses from the use of virtual currencies if a platform that exchanges or holds them collapses and, thus, there is the risk of losing their money.
Noting some of the risks associated with virtual currencies, the CBS points out that there is no guarantee or legal obligation to reimburse at face value virtual currency owners, nor to reimburse them at any time.
It also says that the price of virtual currencies is subject to high volatility and it may rise sharply or even fall to zero value.
The CBS notes that acceptance of virtual currencies by merchants is based on their discretion and may cease to exist at any point and with no prior notice, in other words, any merchant may refuse to accept it for payments.
Additionally it says that transactions in virtual currencies are more liable to be misused for illegal activities.
The public is, therefore, urged to look into all risks associated with the use of virtual currencies.