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European banking officials: Bitcoin may not be your friend

European Banking Authority warns that Bitcoin isn't protected through regulation, so people who invest in the virtual currency risk losing money.

The European Banking Authority issued a stern warning on the value of buying and trading Bitcoin.

In a statement on Friday, the EBA said that as Bitcoin's popularity rises, it comes with "a series of risks deriving from buying, holding, or trading virtual currencies." The issue, the EBA said, is that virtual currencies like Bitcoin are not regulated by the government, putting any investments into them at risk.

Bitcoin has become a hotbed of controversy over the last few years. Earlier this year, it came under fire after the FBI took down the illegal online marketplace Silk Road, which relied in part on Bitcoins to conceal the identities of buyers and sellers and trade currency. More recently, however, Bitcoin has been lauded by some lawmakers in the US as a perfectly viable currency.

Still, without regulation, the EBA said, risks remain.

"In particular, consumers should be aware that exchange platforms tend to be unregulated and are not banks that hold their virtual currency as a deposit," the organization said on Friday. "Currently, no specific regulatory protections exist in the EU that would protect consumers from financial losses if a platform that exchanges or holds virtual currencies fails or goes out of business."

The EBA stopped short of saying that consumers should not invest in virtual currencies like Bitcoin, but said that they should "not use 'real' money that they cannot afford to lose."

The EBA's warning comes just a week after China said that it will not allow for the exchange of Bitcoins through its banks, but would allow its citizens to exchange Bitcoins freely in the country.