European Regulators Warn Crypto Investors of Risk of “Losing Everything”
- The European bloc’s supervisory bodies claim that cryptocurrency investors have no protection against scams or losses.
- They point out that cryptocurrencies are highly volatile and risky assets, whose price is based exclusively on demand.
Again the regulators of the European Union have warned about the risk that investors in cryptocurrencies run. In a statement published on Thursday, the bloc’s authorities said that digital assets are “risky” and “speculative” and discourage retail savers from using them as an investment or as a means of payment.
"Consumers face the real possibility of losing all the money invested," warned the statement quoted by Reuters. The warning is made by the European Banking Authority, together with the European Securities and Markets Authority and the European Pension and Retirement Insurance Authority.
European supervisory bodies also warn that investors in cryptocurrencies do not have any type of protection. They point out that they are not able to claim before any instance nor are they protected by the financial services regulations of the European Union.
In this sense, the regulators call on users to act with caution before making this type of investment. Especially if the decision has been encouraged by “misleading advertising”, which abounds in social networks and influencer accounts in which high rates of return or very quick profits are promised.
“You may be a victim of scams, fraud or cyberattacks”
In the statement, the supervisory bodies prompted people to keep in mind other underlying risks:
“Prices can go down and up quickly in short periods; you may be a victim of scams, fraud, operational errors or cyber attacks; And it is unlikely that you will have rights to protection or compensation if something goes wrong”, the statement said.
Likewise, they invite crypto investors to ask themselves if they are willing to lose all their money and take big risks. Also, if they are sure that they can protect their personal keys and if the devices they use to buy, store and sell cryptocurrencies are safe.
The text of the European statement urges investors to check if the companies to which they entrust their money have a good reputation or appear on a black list of warnings from regulators.
“Many crypto assets suffer from sudden and extreme price fluctuations and are speculative in nature,” they note. While indicating that the price of cryptocurrencies "is often based solely on consumer demand", since they are not backed, and "you can lose a large amount of money or even all the money invested".
The chorus of warnings from the European authorities have been joined by the CNMV, the Bank of Spain and the General Directorate of Insurance and Pension Funds, according to the newspaper El País on Thursday. Spanish regulators subscribed to the warning of the European bloc regulators and recalled having launched similar alerts in 2018 and 2021.
On the Flipside
- This week it was also learned that the International Monetary Fund asked the Argentine government to take measures to “discourage” the use of cryptocurrencies in that country.
- The international lender is promoting the issuance of central bank digital currencies (CBDCs), in a clear sign that governments are preparing to compete with private cryptocurrencies.
Read more: https://dailycoin.com/european-regulators-warn-crypto-investors-of-risk-of-losing-everything/
Text source: DailyCoin.com
