Cautioning against the “highly risky and speculative” assets in an official statement on Thursday, the European Supervisory Authorities (ESAs) said that crypto investors must “face the very real possibility of losing all their invested money if they buy these assets”.
The group added that investors need to be aware of the risks of misleading advertisements, including those on social media and from influencers.
“Consumers should be particularly wary of promised fast or high returns, especially those that look too good to be true,” the group, consisting of the European Banking Authority (EBA), European Securities and Markets Authority (ESMA) and European Insurance and Occupational Pensions Authority (EIOPA) said.
The EU is increasingly troubled by the rising number of investors putting money into 17,000 different crypto assets without being fully aware of the risks.
The trio alerted consumers to the lack of recourse or protection available to them, as crypto assets and related products and services typically fall outside existing protection under current EU financial services rules.
It also flagged the high energy consumption, alerting consumers to the environmental impact.
In September 2020, the European Commission presented a legislative proposal for a regulation on markets in crypto assets, which remains subject to the outcome of the legislative process.
Consumers will not currently benefit from any of the safeguards foreseen in that proposal until it is adopted and applied.
Maja Garaca Djurdjevic
Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.
