Three EU regulators have issued a joint statement warning against the risks of investing in cryptocurrencies.
The European Banking Authority, European Securities and Markets Authority, and European Insurance and Occupational Pensions Authority said that crypto assets are “not suited for most retail consumers as an investment or as a means of payment or exchange.”
Criminal activity and scams have become increasingly common in the industry as digital assets have gained mainstream attention.
The European Union’s securities, banking, and insurance regulators have warned consumers against the risks of investing in crypto.
EU Regulators Say Crypto Investors Risk Going BrokeEU regulators have issued a warning about the risks of investing in cryptocurrencies.
Three European financial regulators, the European Banking Authority, European Securities and Markets Authority, and European Insurance and Occupational Pensions Authority issued a joint press statement Thursday warning consumers of the risks of the emergent asset class.
“Consumers face the very real possibility of losing all their invested money if they buy these assets,” the EU’s three financial watchdogs said. The warning was prompted by the growing investor interest in crypto and the aggressive promotion of cryptocurrencies and related products via social media and influencers. Cryptocurrencies are highly risky, speculative, and “not suited for most retail consumers as an investment or as a means of payment or exchange,” the regulators added.
The warning includes a checklist of the most important risks that the regulators believe investors should consider before investing in crypto. Extreme volatility, misleading information, an absence of consumer protection, fraud, hacks, and market manipulation were cited as the regulators’ top concerns in the statement.
The regulators’ warning comes as the scale of fraud, theft and misleading advertising in the cryptocurrency market reaches new highs. According to the latest crypto crime report by blockchain analytics firm Chainalysis, scammers took home a record of $14 billion in cryptocurrencies in 2021. Examples of celebrity and influencer-endorsed pump-and-dump schemes are also plentiful. In January, for instance, a group of investors filed a class-action lawsuit against reality TV star Kim Kardashian and world champion boxer Floyd Mayweather for making “false or misleading statements” and promoting the EthereumMax project, whose token has since plummeted by 97.8%.
Many crypto-native influencers—well known in the crypto scene but less so outside of it— have been caught promoting dubious projects that subsequently vanished without a trace or “pulled the rug” on their investors. Influencers often get paid to give exposure to projects, but some have been caught running paid promotions on their social media channels without posting any disclosure (such behavior violates securities laws in the United States).
The NFT space has become a particularly fertile hub for scams since the technology exploded in popularity. Many projects have come under fire for charging extortionate sums for NFTs, misleading investors, and failing to deliver on their promises. One of the biggest recent scandals involved the Pixelmon project, which raised $70 million from investors after heavy marketing but was later accused of offering underwhelming artwork. Pixelmon issued an apology following the reveal and the collection became the subject of mockery in the community.
Before deciding to invest in cryptocurrencies, the EU’s regulators prompted consumers to first consider whether they could afford to lose all their invested money, warning that they’re “unlikely to have any rights to protection or compensation if things go wrong.”
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
What is Rarible: A DAO for NFTs
What was once dismissed as a silly and expensive sector, NFTs give creators access to global markets in a way that’s never been possible before, and it’s all thanks to blockchain.Those familiar…
Hype, Bad Art, Deception: Pixelmon’s $70M NFT Rug Unpacked
Pixelmon, an NFT gaming project that sold $71.4 million worth of NFTs at the start of the month, has been accused of pulling the rug on its buyers. The project’s…
Crypto Crime Topped $10 Billion in 2021: Report
Jan. 7, 2022
DeFi security firm ImmuneFi has published a report suggesting that $10.2 billion was stolen through crypto attacks last year. The report corroborates other similar reports released in recent weeks. $7.5…
Crypto Crime Soared in 2021, But So Did Usage: Chainalysis
A significant rise in cryptocurrency-related crime accompanied the rise of decentralized finance in 2021. While crypto crime rates hit record highs in absolute numbers, illicit crypto transactions marked record lows…
Leave a Reply