©Reuters. European Supervisors Warn of High Cryptocurrency Risk
Paris, March 17 (EFE) .- The European financial supervisory authorities issued a warning to consumers this Thursday about the high risks of investing in cryptocurrencies, which are also not usually covered by the protection mechanisms of other assets.
In a statement, the banking supervisor (EBA), the insurance supervisor (EIOPA), the stock market supervisor (ESMA) and the Joint Committee of European Supervisory Authorities justify this notice due to the growing activity and interest aroused by cryptoactives, but also before visible “aggressive promotion” even in the media.
The main caveat is that these assets “are not suitable for most retail consumers as an investment or as a means of payment or exchange.”
The reason is that there is a “very real” risk of losing all of the money as they are subject to extreme and sudden volatility, since their price depends solely on demand and they may not be backed by other tangible assets or securities.
In this regard, the four authorities point out that pricing mechanisms are often not transparent, that in some cases there is a large concentration of holders and cases of market manipulation have been recorded on multiple occasions.
They insist that you have to be aware of the risks of “misleading advertising” that can come through social networks, and that you have to be especially wary of promises of high performance.
Also in the lack of protection in the European Union for most cryptocurrencies. This means that you are not covered by the regulated rights for financial services, such as the possibility of filing a complaint or formalizing an appeal.
The supervisory entities emphasize that the consumer “should be aware of the specific risks of crypto assets and related products and services and carefully weigh whether the risks are acceptable given their own preferences and financial situation.”
For those who are thinking of buying this type of product, he advises them to ask themselves a series of questions such as “can you afford to lose all the money you invest?”; Are you willing to take big risks to get the advertised returns?”; “Do you understand the characteristics of the crypto asset or related products and services?”.
Other questions to ask yourself are “are the companies you are dealing with reputable?”; “Are they blacklisted by the national authorities?”; “Are you able to effectively protect the devices you use to buy, store, or transfer crypto assets, including your private keys?” EFE
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