On Thursday, 17 March, the European financial supervisory authorities (ESMA, EBA, and EIOPA) issued a warning regarding crypto-assets, which are of increasing interest to retail investors.
In fact, they state that they are “concerned that an increasing number of consumers are buying those assets with the expectation that they will earn a good return without realising the high risks involved”.
The European authorities warn that many crypto-assets are highly risky and speculative and thus not suited for most retail investors as an investment or as a means of payment or exchange. It is possible that all the money invested could be lost, and retail investors must be alert to the risks of misleading advertisements, including via social media and influencers.
Seven main risks are identified: extreme price changes; misleading information; lack of protection; product complexity; fraud and malicious activities; market manipulation; lack of price transparency, and low liquidity; and hacking, operational risks, and security issues.
The directive aiming to establish a uniform legal framework for crypto-assets in the EU (MiCA) will soon be the subject of interinstitutional negotiations—once MEPs have adopted their negotiating position (see EUROPE 12910/12).
To read the warning: https://www.esma.europa.eu/sites/default/files/library/esa_2022_15_joint_esas_warning_on_crypto-assets.pdf (Original version in French by Anne Damiani)