With the current spike in cryptocurrency adoption, financial regulators in the European Union (EU) have raised a red flag to all crypto users, warning them of the enormous risks associated with these volatile digital currency products.
This warning which was issued on Thursday by three financial regulators in the EU advised all EU citizens on the fact that digital assets such as crypto are highly speculative and risky.
Although several warnings on crypto activities and their associated risks have been issued in time past, this is however the first time a unanimous warning would be coming from these three financial regulators viz; European Banking Authority; European Securities and Markets Authority; and European Insurance and Occupational Pensions Authority.
Aside from the popular Bitcoin and Ether, the crypto market has grown to become so robust as it brims with over 17,000 digital assets; and this product variety portrays a source of concern for the market regulators as the possibility of individuals throwing their funds into white elephant projects is high.
The regulators have therefore boldly asserted that crypto assets are not in any way the best choice when it comes to picking a financial investment plan. Individuals are therefore advised not to be lured through witty advertisements or the promise of huge returns as they stand the chance of losing every invested penny.
According to these financial regulators, crypto assets and all products that have a bearing with crypto currently do not have any form of protection under the present-day EU financial services rule.
This, therefore, implies that anyone who chooses to trade or throw in funds in crypto-related assets or products does so solely at his risk.
Crypto Firm Undergo Financial Scrutiny
This no doubt ought to be worrisome times for individuals who have invested or who plan to invest in the crypto market as up to 50 crypto firms in the UK are currently being investigated by the Financial Conduct Authority (FCA).
Some of the allegations leveled against these crypto firms include scams and theft of investor funds.
A report, however, shows that the crypto market has grown to reach a market capitalization of around $1.8 trillion while the Non-Fungible Token (NFT) market, in particular, had sales reaching a staggering high of $17.6 billion in the year 2021. This growth continues to be recorded despite the apparent crackdown on trading platforms.