EU Regulators Label Cryptocurrencies as ‘High Risk’ in Warning to Consumers
In a short note issued by the European Supervisory Authorities (ESA) for securities, banking and insurance & pensions, the regulatory body has officially warned consumers of the pitfalls of ‘virtual currencies’. They have been labelled as ‘high risk’ and ‘extremely volatile’, with consumers being told they could lose ‘a large amount, or even all, of the money invested.’
They also warn of the dangers of trading on exchanges that are not regulated under EU law, as consumers are not protected in the event that an exchange goes under or funds are stolen. Whilst we agree with the ESA that exchanges need financial regulation to protect consumers, as well as that cryptocurrencies are highly volatile and some are higher risk than traditional investments, the notion that investors could lose all of their money seems like scaremongering.
As long as investors thoroughly research whatever they plan to invest in and store their assets safely, the chance that they will lose ‘all of their money’ is extremely low. Yes the markets are volatile, and yes exchanges are prone to hacks, but a little due diligence can go a long way to protecting consumers from these shortcomings.
Regardless, the skeptical tone does not bode well for the future of cryptocurrencies within the European Union. We will be staying on top of any new developments, so stay tuned for updates as we progress into 2018.