European Union's banking regulator has warned financial institutions and online investors about the risks of doing transactions using Bitcoin, following reports of wide-spread fraud involving the virtual currency.

The European Banking Authority (EBA) is currently weighing the need to regulate virtual currencies like Bitcoin.

Recently, the central banks of China and France also sounded alarm over the risks of doing financial transaction using electronics currencies like Bitcoin. During the past week, the value of Bitcoin experienced unprecedented fluctuation.

The EBA has warned consumers using online currencies that unlike deposit holders they are not protected against the potential losses arising from frauds as virtual currencies are not supported by any central bank or government.

Despite gaining widespread acceptance among online traders and the general public across the world, Bitcoin has not yet become an accepted mode of payment on the major online retail websites.

Bitcoin, an open source peer-to-peer electronic money and payment network, is untraceable and can be transferred electronically. There have been reports of Bitcoin and other electronic currencies triggering online crimes involving hackers who steal the currency by intruding into online platforms.

RTTNews