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- EU regulators publish new warnings about cryptocurrencies.
- ESAs believe that investors face the risk of losing all of their money.
- They warn that there are currently no safety nets for the nascent market in the region.
The EU has released a new warning for crypto users in the region. The regulatory framework for digital assets in the bloc continues to advance through the syndicate's legislative process.
'Crypto assets are highly risky and speculative'
The European Supervisory Authorities (ESA) comprising the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA) in a Press release today warned users about the risks they face when using crypto. They reminded cryptocurrency users that "Crypto assets are highly risky and speculative."
The regulators explained that they were giving this warning in light of the increase in cryptocurrency-related activities and interests in the region. The ESAs also expressed concern about what they called โaggressive promotionโ of crypto assets "and products related to the public, including through social networks."
Giving 3 reasons, the regulators explained that most crypto assets were not suitable as investments or payment solutions, contrary to popular opinions. The warning said that crypto investors have to "They face the very real possibility of losing all of their invested money if they buy these assets." He also stated that users should be careful with โmisleading advertisementsโ, even those on social media through influencers.
Regulators also told crypto users to be especially suspicious of ads that promised "fast or high returns, especially those that seem too good to be true." The statement indicated that these warnings are based on the โJoint ESA warning issued in February 2018 and statement in March 2021.โ
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In the warning, the ESA reminded crypto users that there are currently no safeguards in place for them, as digital assets are not yet subject to regulation in the region. The ESAs told users that the regulatory framework proposed by the European Commission was still going through the necessary legislative processes and, as such, was not law and did not yet offer protection. Europe's proposed crypto regulatory framework, MiCA, went through a voting process on Monday.
The EU and crypto regulation
Cryptocurrencies have become the subject of intense debate in Europe in recent years. In addition, the ban on Bitcoin and cryptocurrency mining activities in China has also catalyzed many discussions. As a result, a number of Bitcoin miners had to migrate out of the country to the United States and parts of Europe, effectively increasing blockchain activity in the region.
Last year, Swedish regulators, in an open letter to the EU, proposed that Bitcoin mining be banned in Europe, citing energy and environmental concerns. The letter has received serious consideration in countries such as Spain and Norway.
Just before the EU voted on MiCA on Monday, the crypto community feared that its provisions would effectively ban PoW (Bitcoin) crypto on the bloc. However, in what has been described as a major victory for Bitcoin in the region, members of the European Parliament voted against the provision in question. French lawmaker Pierre Person believes that the bloc must adopt blockchain technology to compete favorably with other nations.
