Consumers who invest in crypto assets risk losing all of their money and becoming victims of frauds, according to a joint statement released by the European Union’s securities, banking, and insurance watchdogs on March 17.
According to Crypto Marketing Center, EU supervisory organizations have cautioned that consumers risk losing all of their money invested in cryptocurrencies and may become victims of fraud. The European Banking Authority (EBA), the European Securities and Markets Authority (ESMA), and the European Insurance and Occupational Pensions Authority (EIOPA) said in a joint statement that consumers face the genuine risk of losing all of their money if they buy these products.
This is quite a strong statement, especially coming from the EU. The European authorities warn cryptocurrency buyers, stating that they are unprotected and unable to seek compensation under present EU financial services legislation. Regulators are growing concerned that more people are purchasing 17,000 various crypto assets, including bitcoin and ether, which account for 60% of the market, without fully understanding the risks, according to the regulators.
Consumers should be aware of the risks of misleading advertisements, including those distributed through social media and influencers, according to a joint statement issued by the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA), and the European Insurance and Occupational Pensions Authority (EIOPA). Consumers should be wary of promises of quick or high returns, especially if they appear too good to be true.
As a result, those who use cryptocurrency are vulnerable to fraud at any time, with no safeguards or recourse available under current EU financial services legislation.
Is this enough to deter crypto enthusiasts from investing in digital coins? Time will tell, but the conflict in Ukraine, the pressures from the regulators, and the trouble in digital mining currency due to restrictions in China and because the high energy prices will definitely slow the enthusiasm, at least for a while.