Consumers risk losing all of their money invested in crypto-assets and falling victim to frauds, according to a joint statement issued by the European Union’s securities, banking, and insurance watchdogs on Thursday.
“Consumers run the very real risk of losing all of their invested money if they purchase these assets,” warned the three EU regulators in a joint statement.
It represents an increase in EU regulators’ clear cautions to consumers about crypto assets, emphasising that customers have no protections or recourse to compensation under existing EU financial services regulation.
Regulators are increasingly concerned that more customers 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.
The statement also said consumers should be wary of false marketing, particularly those distributed through social media and influencers. Consumers should be sceptical of promises of quick or substantial returns, especially if they appear too good to be true.
Consumers should also be aware of the significant energy consumption required to produce some crypto assets, as well as the environmental impact this has.
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