EU Regulators Warn against ‘Highly Risky and Speculative’ Crypto Assets

Multiple financial market regulators within the European Union released a joint warning statement on Thursday against crypto-assets, saying many of them are “highly risky and speculative.” They further said crypto-assets are neither suited for retail investments nor can be used for payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term.

The warning was issued by three European regulators: European Banking Authority (EBA), European Securities and Markets Authority (ESMA) and European Insurance and Occupational Pensions Authority (EIOPA).

“Consumers face the very real possibility of losing all their invested money if they buy these assets,” the regulators said.

Additionally, they asked crypto traders and investors to be cautious about the risks of misleading advertisements, mostly on social media and by influencers. Moreover, they should not fall for the promises of 'fast or high' returns, mostly which are too good to be true.

“Consumers should be aware of the lack of recourse or protection available to them, as cryptoassets and related products and services typically fall outside existing protection under current EU financial services rules,” the regulators said.

Many Warnings

This is not the first warning against cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term issued by any European regulator but is surely the first joint warning of the three authorities. Earlier, ESMA alarmed people against the volatility of the cryptocurrency market. Other National Competent Authorities (NCAs) within the EU also warned against crypto investments.

“The ESAs note growing consumer activity and interest in crypto-assets, including so-called virtual currencies and the emergence of new types of crypto-assets and related products and services, for instance, so-called non-fungible tokens (NFTs), derivatives with crypto-assets as underlying, unit-linked life insurance policies with crypto assets as underlying and decentralized finance (DeFi) applications, that claim to generate high and/or fast returns,” the joint warning added.

“The ESAs are concerned that an increasing number of consumers are buying those assets with the expectation that they will earn a good return without realizing the high risks involved.”