Norwegian Financial Regulator Alarms Consumers against Cryptos

The Financial Supervisory Authority of Norway, locally known as Finanstilsynet, has become the latest regulator to issue a 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, citing trading risks as well as booming scams.

The warning from the nordic regulator came when more and more retail consumers are investing in cryptocurrencies and considering them as new savings and investment alternatives.

“Most cryptocurrencies are subject to extreme price fluctuations,” wrote Jo Gjedrem, Consumer Coordinator at Finanstilsynet. Indeed, cryptocurrencies have shed a major chunk of their market value recently due to China’s extended crackdown on the local Crypto Mining Crypto Mining Cryptocurrency mining is defined as the process through which the transactions of a digital currency are authenticated then published to blockchain. For every crypto transaction conducted, a crypto miner is in charge of authenticating the information which, if approved, is then updated in the blockchain. Currently, the most popular cryptocurrencies being mined are Bitcoin, Litecoin, Ethereum Classic, Monero, and DASH. How is Cryptocurrency Mined?The process of crypto mining itself involves the s Cryptocurrency mining is defined as the process through which the transactions of a digital currency are authenticated then published to blockchain. For every crypto transaction conducted, a crypto miner is in charge of authenticating the information which, if approved, is then updated in the blockchain. Currently, the most popular cryptocurrencies being mined are Bitcoin, Litecoin, Ethereum Classic, Monero, and DASH. How is Cryptocurrency Mined?The process of crypto mining itself involves the s Read this Term industry.

Additionally, he pointed out that the risk of losses with crypto investment is high and ‘price formation is in many cases not transparent.’ Some earlier reports have accused major exchanges of their involvement in wash trading, but those industry traits are believed to have trimmed significantly.

Cryptos are Vulnerable

In addition, the Norwegian regulator is concerned about the growing scams involving cryptocurrencies. “Scammers use spam, computer viruses, fake drawings and a variety of other techniques to deceive consumers.”

Finanstilsynet's warning followed other regulators like the United States Securities and Exchange Commission (SEC) and UK-based Financial Conduct Authority (FCA) in issuing warnings to crypto investors.

“Cryptocurrency is largely unregulated,” the Norwegian financial watchdog stated. “In stark contrast to regulated savings and investment products, there is no statutory consumer protection for buyers of cryptocurrencies.”

Furthermore, it pointed to many cryptocurrency platforms that falsely advertised to be regulated by Finanstilsynet when it does not even regulate the industry.

“This is very misleading,” the regulator added. “The platforms have a duty to notify Finanstilsynet in accordance with the money laundering regulations, but apart from money laundering supervision, Finanstilsynet does not supervise these actors.”

The Norwegian regulator now proposed strong regulations for the cryptocurrency industry in accordance with the suggestions made by the European Commission.

“There is a strong need for a legal framework and investor protection if cryptocurrency is to be able to become a suitable form of investment for consumers,” Finanstilsynet continued. “Until such regulations are in place, anyone considering trading in cryptocurrency should think carefully and understand the significant risk that such investments entail.”