Investors risk losing all the money they invest in speculative crypto assets and should be wary of scams EU regulators warned in a joint statement.
Europe’s banking, securities and insurance watchdogs issued a stark warning to consumers about the unregulated and risky nature of crypto assets, reminding prospective investors to be wary of dubious advertisements promising high returns. While the European Commission is pushing forwards with legislation to regulate crypto assets, dubbed MiCa, consumers do not currently benefit from any safeguards because it is not yet EU law, the regulators said.
“These assets are not suited for most retail consumers as an investment or as a means of payment or exchange,” the European regulators said in a statement.
“Consumers must be alert to the high risks of buying and or holding these instruments, including the possibility of losing all their money,” the statement added.
The comments come amid widespread adoption of digital assets in Europe, with many investors taking to trading digital assets for the first time during the pandemic. In the UK some 2.3m Brits are estimated to hold crypto – 4.4 per cent of the adult population.
Regulators have also shone a spotlight on crypto amid conflict between Russia and Ukraine. While the Ukranian government has relied upon crypto donations as a source of fundraising governments worldwide are also concerned that crypto assets are being used to undermine the effectiveness of economic sanctions against Russian individuals. Several hundred thousand crypto wallet addresses have been linked to sanctioned Russian individuals by blockchain research firm Elliptic.
“In relation to the current situation in Ukraine, and with a view to ensuring the proper implementation of the sanctions in place, the ESAs welcome the clarification by the Council of the European Union of the scope of the restrictive measures against Russian and Belarusian entities and individuals as regards crypto-assets,” the regulators commented.