The European Supervisory Authorities (ESAs) for securities (ESMA), banking (EBA) and insurance and pensions (EIOPA) have made an announcement for consumers regarding the risks of buying cryptocurrencies.
The ESAs are concerned that an increasing number of consumers are buying VCs unaware of the risks involved. VCs such as Bitcoin, are subject to extreme price volatility and have shown clear signs of a pricing bubble and consumers buying VCs should be aware that there is a high risk that they will lose a large amount, or even all, of the money invested.
Additionally, VCs and exchanges where consumers can trade are not regulated under EU law, which means that consumers buying VCs do not benefit from any protection associated with regulated financial services. For example, if a VC exchange goes out of business or consumers have their money stolen because their VC account is subject to a cyber-attack; there is no EU law that would cover their losses.
Some VC exchanges have been subject to severe operational problems in the past. During these disruptions, consumers have been unable to buy and sell VCs when they wanted to and have suffered losses due to price fluctuations during the period of disruption.
ESMA ICO WARNING
The ESMA states that this warning is based on article 9(3) of the three ESas' founding Regulations. It also serves as a message following the statement by the EU regulator from November 2017 about ICO risks.
Posted on: 13/02/2018