3 EU Watchdogs Warn Over ‘High Risks’ of Crypto Investment

Three European regulators with oversight over securities, banking and pensions issued a combined warning today to EU residents considering investing in cryptocurrencies.

Citing the crypto markets’ volatility, lack of regulation and the potential for severe losses, the European Securities and Markets Authority (ESMA), the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) wrote a brief note warning investors of the “high risks of buying and/or holding so-called virtual currencies.”

Collectively referred to as the European Supervisory Authorities (ESAs), the regulators state there is a “high risk” that investors will lose all of their funds if they choose to invest in cryptocurrencies, specifically noting that there is an apparent bubble in the markets currently.

They continued, writing:

“VCs [virtual currencies] and exchanges where consumers can trade are not regulated under EU law, which means that consumers buying VCs do not benefit from any protection associated with regulated financial services. For example, if a VC exchange goes out of business or consumers have their money stolen because their VC account is subject to a cyber-attack; there is no EU law that would cover their losses.”

The warning explicitly mentions bitcoin, ethereum, litecoin and XRP, while further noting that other cryptocurrencies are often sold without any information explaining their background or the risks in purchasing them.

Part of the risk, the ESAs claim, arises from difficulty purchasing or selling cryptocurrencies due to transaction delays. Users may purchase some amount of a cryptocurrency at a specific price, but network congestion means they could receive a smaller amount at a higher price, they say…

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