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14.02.2018 16:55 Age: 7 days
Category: News

ESAs Issue Pan-EU Warning of Risks linked to Buying Virtual Currencies

Amidst the recent plunge of the value of popular cryptocurrencies, the European Supervisory Authorities (ESAs) issued a warning on Monday the 12th of February on the risks of buying and holding Virtual Currencies (VCs). The ESAs, ESMA, EBA and EIOPA, cite their growing concern with consumers buying and holding VCs unaware of the high levels of risk involved. The warning follows a publication of two statements by ESMA on initial coin offerings in November 2017, an earlier warning to consumers and two opinions on VCs published by EBA in December 2013, July 2014 and August 2016 respectively.

Outside the grasp of EU law, investors stand to lose a significant portion of invested funds if things are to go awry, with no offered protection like that associated with regulated financial services. The high levels of risk connected with buying and holding VCs according to the ESAs include their inherent volatility, the unregulated nature of the product and recent signs of a pricing bubble. The usage of VCs by European consumers as investments or savings and retirement planning is seen as problematic and indeed not within the scope of what the ESAs see as suitable uses of VCs. With the threat of cyber-attacks beckoning and VCs exchanges going out of business, the ESAs’ main concern is unaware consumers risking money they can indeed not afford to lose.  


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