The European Supervisory Authorities have sent out a warning to consumers that many crypto assets are ‘highly risky and speculative’.
The ESAs – which comprises the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority – set out key steps consumers could take to ensure they make informed decisions.
According to the EIOPA, the warning comes in the context of growing consumer activity and interest in crypto-assets and the aggressive promotion of those assets and related products to the public, including through social media.
In the warning to the public, the ESAs detailed that these assets ‘are not suited for most retail consumers as an investment or as a means of payment or exchange’.
Consumers, the authorities warn, face the ‘very real possibility’ of losing all of their invested money if they buy these assets. They should also be alert to the risks of misleading advertisements, including social media and influencers and show be wary of ‘promised fast or high returns’ especially if they appear to look too good to be true.
The ESAs also warned consumers that they should be aware of the ‘lack of recourse of protection available to them’ as crypto assets and related products and services commonly fall outside existing protection under current EU financial services rules.
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