NEW YORK (MarketWatch) -- The U.S. Securities and Exchange Commission on Wednesday issued an investor alert about the potential risks associated with bitcoin and other virtual currencies. The alert referenced the potential for heightened risk of fraud with bitcoin investments, the possibility that bitcoin users could be targeted for fraudulent or high-risk investment schemes, and the limited recovery options in case of bitcoin theft or fraud. "A new product, technology, or innovation - such as Bitcoin - has the potential to give rise both to frauds and high-risk investment opportunities. Potential investors can be easily enticed with the promise of high returns in a new investment space and also may be less skeptical when assessing something novel, new and cutting-edge," the SEC said. The SEC investor alert also noted that bitcoins are not legal tender and are not insured. The SEC previously issued an investor alert about the use of bitcoins in Ponzi schemes. The Financial Industry Regulatory Authority issued an investor alert in March.