ESMA sees high risk for investors in non-regulated crypto assets

The European Securities and Markets Authority (ESMA), the EU securities markets regulator, published its first Trends, Risks and Vulnerabilities (TRV) Report of 2021. The Report analyses, among other things, the risks linked with investments in non-regulated crypto-assets.

The European Supervisory Authorities (ESAs, which include ESMA, EBA and EIOPA) remind consumers of the risks of investing in crypto-assets.

As crypto-assets, including so-called virtual currencies such as Bitcoin, continue to attract public attention, the ESAs recall the continued relevance of their previous warnings.

The ESAs remind consumers that some crypto-assets are highly risky and speculative and, as stated in the ESAs’ February 2018 joint warning, consumers must be alert to the high risks of buying and/or holding these instruments, including the possibility of losing all their money.

Additionally, crypto-assets come in many forms but the majority of them remain unregulated in the EU. This means that consumers buying and/or holding these instruments do not benefit from the guarantees and safeguards associated with regulated financial services.

In September 2020, the European Commission presented a legislative proposal for a regulation on markets in crypto-assets (the draft MiCA rules). Consumers are reminded that the proposal remains subject to the outcome of the co-legislative process and so consumers do not currently benefit from any of the safeguards foreseen in that proposal because it is not yet EU law.

For more information, see ESMA’s website here.

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