Investors must face the possibility of losing all their money in crypto assets, a group of top financial regulators in the European Union (EU) warned consumers on Thursday.
The regulators warned that crypto assets are “highly risky” and sufficient measures are needed to protect consumers, which currently do not exist in the EU.
The message was published by the European Supervisory Authorities (ESAs) made up of the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA).
The group said that crypto investors must “face the very real possibility of losing all their invested money if they buy these assets” adding that investors should also be privy to misleading advertisements, even on social media and via influencers. It also warned that crypto investors “should be particularly wary of promised fast or high returns, especially those that look too good to be true.”
This warning is based on previous similar messages from EU regulators, like the founding regulations of the ESAs, a joint-ESA warning from 2018, as well as a statement issued in March 2021.
“The ESAs also warn consumers that they should be aware of the lack of recourse or protection available to them,” the message read, adding that the proposed regulations for crypto in the EU is still moving through the union’s legislative process.
The proposed Markets in Crypto Assets (MiCA) regulatory package for governing digital assets passed through a parliamentary committee vote on Monday and is now moving on to the next stage of negotiations between EU governments before being eventually ratified.
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