Bucharest, 18 November 2022 - In the context of recent developments in the international cryptoasset trading markets and the risks they may induce in global financial markets, in order to protect consumers of non-bank financial products, the Financial Supervisory Authority reiterates the warning published in March 2022, taken from the European Securities and Markets Authority (ESMA), on the risks related to cryptoassets.
Warning issued by EU financial regulators on the risks of cryptoassets
Autoritățile europene de supraveghere (ABE, ESMA și EIOPA – AES) avertizează consumatorii că multe criptoactive sunt extrem de riscante și speculative. Pentru majoritatea consumatorilor retail nu sunt adecvate ca investiție sau ca mijloc de plată sau de schimb.
Consumatorii se confruntă cu posibilitatea reală de a-și pierde toți banii investiți dacă vor cumpăra aceste active. Consumatorii ar trebui să fie vigilenți cu privire la riscurile de publicitate înșelătoare, inclusiv prin platforme de comunicare socială și influențatori. Consumatorii ar trebui să fie deosebit de vigilenți în ceea ce privește câștigurile rapide sau mari promise, în special cele care par prea bune ca să fie adevărate.
Consumatorii ar trebui să fie conștienți că nu dispun de nicio cale de atac sau protecție, întrucât criptoactivele și produsele și serviciile conexe nu intră, de regulă, sub incidența protecției existente în temeiul normelor actuale ale UE privind serviciile financiare.
What you should know and check
You should be aware of the specific risks of cryptoassets and related products and services and carefully assess whether the risks are acceptable, given your preferences and financial situation. These include:
If you are considering buying cryptoassets or related products and services, you should ask yourself the following questions:
What are the main risks?
Extreme price variations: many cryptoassets are subject to sudden and extreme price variations and are speculative because their price is often based solely on consumer demand (i.e. there may be no guaranteed assets or other tangible values). You can lose a large amount or even all of your invested money. Extreme price fluctuations also mean that many cryptoassets are not suitable as store of value and means of exchange or payment;
Misleading information: some cryptoassets and related products are aggressively promoted to the public using marketing materials and other information that may be unclear, incomplete, inaccurate or even intentionally misleading. For example, advertising through social media platforms can be very brief, with a focus on potential gains but not high risks. You should also be wary of "influencers" on social media platforms who usually have a financial incentive to market certain cryptoassets and related products and services, and may therefore be biased in the communications they issue;
Lack of protection: most cryptoassets and the sale of products or services related to cryptoassets are unregulated in the EU.2 In these cases, you will not benefit from the rights and protections available to consumers for regulated financial services, such as complaints or redress mechanisms;
Product complexity: some products offering exposure to cryptoassets are very complex, sometimes with features that can increase the magnitude of losses in the event of adverse price movements. Given their complexity, these products are not suitable for many consumers;
Fraud and malicious activities: there are many fake cryptoassets and scams and you should be aware that their sole purpose is to deprive you of your money through various techniques, for example phishing;
Market manipulation, lack of price transparency and low liquidity: the way cryptoassets are priced and the way trades are executed often lack transparency. Holdings of certain cryptoassets are also highly concentrated, which can impact prices or liquidity. As a result, you may not receive a fair price or treatment when buying or selling cryptoassets, or you may not be able to sell your cryptoassets as quickly as you would like in the absence of a potential buyer. Cases of market manipulation have been reported on several occasions;
Attacks, operational risks and security issues: the distributed ledger technology underlying cryptoassets can bear specific risks. Several issuers and service providers of cryptoassets, including cryptoasset platforms and digital wallet providers, have faced cyber attacks and serious operational issues. Many consumers have lost their cryptoassets or suffered losses due to such attacks and disruptions, or because they have lost the private keys that give them access to their assets.
This warning is based on Article 9(3) of the Regulations establishing the ESA3. It complements previous warnings on the risks of buying/holding crypto-assets.4,5,6
In September 2020, the European Commission presented a legislative proposal for a regulation on crypto-asset markets7. The proposal provides a comprehensive framework for the regulation and supervision of issuers and service providers of cryptoassets to protect consumers and the integrity and stability of the financial system. However, consumers are reminded that the proposal is still subject to the outcome of the co-legislative process8. Consumers will not currently benefit from any of the safeguards set out in this proposal until it is adopted and implemented.
At the time of this warning, there are over 17 000 different cryptoassets, some of which are sometimes referred to as "virtual currencies" or digital "coins" or "tokens "9. The most important cryptoassets to date are bitcoin and ether, which together account for about 60% of the total capitalisation of cryptoassets. The energy consumption of some cryptoassets is high, for example from mining and validation processes, and consumers should be aware of their environmental impact10.
1 Please note that not blacklisting a company or party does not guarantee that it is safe for possible collaboration.
2 Some EU Member States have implemented national rules to regulate certain cryptoassets and related products or services. In addition, providers of certain types of cryptoasset services, including exchange services and custody services, must be authorised or registered for anti-money laundering and anti-terrorist financing purposes. For further details, please consult the relevant competent authority.
3 Regulation (EU) 2019/2175 of the European Parliament and of the Council of 18 December 2019 amending Regulation (EU) No 1093/2010 establishing a European Supervisory Authority (European Banking Authority) OJ L31, 15.12.2010, p. 12; Regulation (EU) No .../.../EC of the European Parliament and of the Council of .... 1094/2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority) OJ L 331, 15.12.2010, p. 48; Regulation (EU) No 1095/2010 establishing a European Supervisory Authority (European Securities and Markets Authority) OJ L 331, 15.12.2010, p. 84.
4 EBA (2013), Consumer warning on virtual currencies, 12 December.
5 ESA (2018), ESA warns consumers about risks of buying virtual currencies, 12 February.
6 ESMA (2021), ESMA sees high risks for investors in unregulated cryptoassets, 17 March.
7 Proposal for a Regulation of the European Parliament and of the Council on crypto-asset markets and amending Directive (EU) 2019/1937, COM/2020/593, 24.9.2020.
8 Ordinary legislative procedure - Consilium (europa.eu)
9 Source: Coinmarketcap.com, data as of 3 March 2022.
10 For more details, see e.g. Cambridge Centre for Alternative Finance (2022), "Cambridge Bitcoin Electricity Consumption Index".