European Regulators Issue Joint Warning Against Cryptocurrency Risks
The European Financial Conduct Authority (ESA) warned potential investors that cryptocurrencies are “high risk” assets showing “clear signs of a bubble”. The corresponding appeal [PDF] was issued this Monday.
The ESA includes three European regulators: the European Securities and Financial Markets Authority (ESMA), the European Banking Authority (EBA) and the European Insurance and Non-Government Pensions Authority (EIOPA).
The high degree of risk associated with cryptocurrencies, according to the ESA, means that investors can “lose large sums, including all funds invested.”.
“The ESA warns consumers that virtual currencies are high-risk, unregulated products that cannot form part of investment, savings or retirement products,” regulators write..
The warning, published on the ESMA website, is accompanied by an introductory part, which states that the scale of cryptocurrency investment and the lack of understanding of the principles of this market by investors cause concerns of the regulator.
The authorities also draw attention to the fact that cryptocurrency exchanges do not protect the interests of investors, since they operate outside the regulated space, which means that potential losses that investors may suffer, for example, as a result of a hacker attack, cannot be compensated for under European laws..
“Don’t invest money that you can’t afford to lose,” the message says..
ESMA has previously warned consumers about the risks of cryptocurrency investing. So, in November 2017, the service issued a warning about ICO, mentioning as the main risks the lack of proper regulation and understanding of the principles of the market by investors.
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