EU financial regulators warned consumers that many types of cryptocurrencies are very risky to invest in, as well as speculative in nature, and explained the main steps they can take to make sure they make an informed decision.
Considering the growing consumer interest in cryptocurrency and their growing activity in the field as well as the aggressive advertising of such assets and related products, including through social media, the European Banking Authority (EBA), the European Securities and Exchange Commission, and Capital Markets (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA) in their warning emphasize that such assets are not suitable for most small consumers in the context of investing in them or using them as a means of payment or exchange.
Consumers face a very real possibility of losing all their money!
In their warning, the ESAs highlight that these assets are not suited for most retail consumers as an investment or as a means of payment or exchange, as consumers:
- face the very real possibility of losing all their invested money if they buy these assets;
- should be alert to the risks of misleading advertisements, including via social media and influencers; and
- should be particularly wary of promised fast or high returns, especially those that look too good to be true.
They should be especially careful when it comes to promises of quick or high returns, especially if they sound too good to be true, they said in a statement posted on the CNB's website. Supervisors also warn that consumers should be aware of the lack of available legal or general protection, given that cryptocurrencies and related products and services are usually not covered by existing protection under current EU financial services rules.
Given the current situation in Ukraine, and to ensure proper implementation of the imposed sanctions, the supervisory authorities welcome the explanation of the Council of the European Union regarding the inclusion of restrictive measures against Russian and Belarusian companies and individuals related to cryptocurrency.