(Bloomberg) —
Anyone buying, selling and trading cryptocurrencies should beware, Europe’s top financial watchdogs warned, labeling digital assets as “highly risky and speculative” in a statement published on Thursday.
The European Supervisory Authorities — a group that includes regulators of the banking, securities and markets, and insurance and occupational pensions sectors within the bloc — said cryptoassets are “not suited for most retail consumers,” either as an investment or as a means of payment or exchange. It added that the “aggressive” rise of cryptoasset promotions on social media and via influencers presents an increased risk of misleading advertising, particularly those which promise “fast or high returns” and look too good to be true.
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The group’s statement, published on the European Banking Authority’s website on Thursday, echoed that of other financial watchdogs globally, which have repeatedly highlighted a lack of consumer protection in the fast-growing crypto industry.
Regulators in the U.K., Spain and Singapore took steps earlier this year to legislate for further restrictions on cryptoasset promotions, including the limitation of such ads to only target wealthy individuals.
Read more: U.K. Proposes Tougher Rules to Stop Misleading Crypto Ads
The European authorities said consumers should be prepared to “face the very real possibility of losing all their invested money if they buy these assets,” as it noted the sector’s rapid growth and potential for geopolitical exploitation.
Scope of Restrictions
The warning follows a move by the European Parliament to fast-track legislation on regulating the cryptoasset sector. European officials have cited concerns that cryptocurrencies could be used by Russian entities and individuals to evade sanctions related to the war in Ukraine despite limited evidence to date of this kind of activity.
In the same statement, the supervisory group asked the Council of the European Union to provide further clarification on what steps it is taking to ensure Russian and Belarussian entities are not able to access crypto “with a view to ensuring the proper implementation of the sanctions in place.”
A European committee passed a final draft of the bloc’s Markets in Crypto Assets (MiCA) bill on Monday, which seeks to provide some additional protection for consumers from risks such as money laundering and market manipulation. MiCA now needs to be approved by the EU’s executive arm, as well as EU member states and the full European Parliament before it can become law.
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