Investors or speculators of cryptocurrencies would risk losing all their money invested in crypto assets and could fall prey to scams, the European Union’s securities, banking and insurance watchdogs said in a joint statement on Thursday.
This statement marks a ratcheting up of direct warnings by EU financial regulators to consumers about crypto assets, by spelling out that consumers have no protections or recourse to compensation under existing EU financial services law.
Regulators have expressed their heightened worries as more consumers are buying 17,000 different crypto assets, including bitcoin and ether, which account for 60% of the market, without being fully aware of the risks.
According to the statement, speculators should also be aware of that energy consumption for producing some crypto assets is high and the environmental impact this has.
The statement also stressed that, “Consumers should be alert to the risks of misleading advertisements, including via social media and influencers. Consumers should be particularly wary of promised fast or high returns, especially those that look too good to be true.”
