European regulators warn consumers about cryptocurrency

European regulators warn consumers about cryptocurrency

Photo: ANP

Financial regulators in Europe are warning consumers against investing in cryptocurrencies such as Bitcoin. Trading in cryptocurrencies is highly speculative and investors are exposed to a high risk of losing their investment. Consumers also cannot resort to losses in cryptocurrency investments and have no protection.

The warning comes from regulators EBA, ESMA and EIOPA who are seeing a growing interest in cryptocurrency among individuals. They state that digital currencies are not suitable for most consumers as an investment or payment method because these currencies often have to deal with very strong fluctuations in value. Consumers who invest in digital currencies can also become victims, for example, of cyber attacks and fraud. “Consumers face a very real risk of losing all of their invested money if they buy these assets,” the regulators said in a statement.

He also warns of the dangers of misleading advertising for cryptocurrencies, including by influencers on social media. These influencers could have a financial interest to promote digital currencies and crypto-related products and services. “Consumers should be especially wary of promising quick or high returns, especially if they sound too good to be true.”

The European Union is involved in the regulation and supervision of cryptocurrency markets. The authorities in the United States and other countries, for example, have already warned about the risks that people take with investments in digital currencies.

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