consumer
European financial regulators are very concerned about private individuals buying cryptocurrencies.
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Anyone who buys, sells and trades cryptocurrencies should be careful, Europe’s leading financial watchdogs warn. They label digital assets as ‘highly risky and speculative’.
The European supervisory authorities for banks, investments and insurance have come to the conclusion that cryptocurrencies are ‘not suitable for most retail consumers’, neither as an investment, nor as a means of payment or exchange. The “aggressive” rise of promotion for cryptoassets on social media and through influencers such as Kim Kardashian poses an increased risk of misleading advertising, they add. Especially when they promise ‘fast or high returns’ that seem too good to be true.
The statement of the group, published on the website of the European Banking Authority, echoes that of other financial watchdogs worldwide, who have repeatedly pointed to a lack of consumer protections in the burgeoning crypto industry. Regulators in the United Kingdom, Spain and Singapore took steps earlier this year to introduce legislation that further restricts the promotion of cryptocurrencies, including the restriction of ads.
European authorities are warning consumers to be prepared for “the very real possibility of losing all of their invested money if they buy cryptocurrencies,” while pointing out the industry’s rapid growth and the potential for geopolitical exploitation.
Bypass sanctions
The warning follows the decision of the European Parliament to accelerate legislation on the regulation of the crypto sector. European officials are concerned about cryptocurrencies that could be used by Russian individuals and organizations to evade sanctions, despite limited evidence to date that they actually did so.
In the same statement, the monitoring group asked for more clarity from the EU on how it intends to prevent Russian and Belarusian entities from accessing crypto “for the purpose of properly enforcing the sanctions in place.”
The European Commission approved a final draft of the Markets in Crypto Assets (Mica) bill on Monday. This proposal is intended to provide consumers with additional protection against risks associated with the use of cryptocurrencies, such as money laundering and market manipulation. The bill now needs to be approved by EU member states and the European Parliament.
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