The EU Is Trying to Scare You Away From Crypto

<p>The European Union's securities, banking, and insurance watchdogs issued a joint statement last week warning consumers against investing in cryptocurrencies, claiming they risk losing all their money.</p> <p>The statement, issued by The European Supervisory Authorities (EBA, ESMA, and EIOPA — the ESAs), warns that "Consumers face a very real risk of losing all of their invested money if they purchase these assets." Consumers should be aware of the risks associated with misleading advertisements, which may include those distributed via social media and influencers. Consumers should be especially suspicious of promises of quick or high returns, particularly those that appear to be too good to be true."</p> <p>Consumers are not protected or have any recourse to compensation under existing EU financial services law, the regulators stressed.</p> <p>Additionally, they argued that consumers are buying thousands of different cryptocurrencies, including bitcoin (BTC) and ether (ETH), which together account for 60% of the market, without fully comprehending the risks.</p> <p>According to the EU's watchdogs, those who invest in cryptocurrency should understand that they risk losing all of their money, that prices can fluctuate rapidly over short periods of time, that they may become victims of scams and cyberattacks, and that they are "unlikely to have any rights to protection or compensation if things go wrong."</p> <p>The regulators specifically list seven different types of risks that consumers should be aware of when investing in cryptocurrencies:</p> <p>Extreme price fluctuations; false information; a lack of protection; product complexity; fraud and malicious activity; market manipulation, a lack of price transparency, and low liquidity; and hacks, operational risks, and security issues.</p> <p>That regulators warn that "many crypto-assets are subject to wild price swings and are speculative in nature, as their value is frequently determined solely by consumer demand" (That is, there may be no backing assets