Virtual currencies under heightened scrutiny from EU regulators

The European Securities and Markets Authority has joined the European Banking Authority and the European Insurance and Occupational Pensions Authority to express their concern over the fact that an increasing number of consumers are buying virtual currencies without being aware of the “high risk” of losing their money.

The regulators outlined multiple risks associated with virtual currencies, such as the absence of protection or the lack of exit options and transparency. They even went as far as saying there was a “bubble risk” as most virtual currencies are subject to high price volatility, warning consumers that they could therefore lose all their investment.

Moreover, information for consumers who wish to buy virtual currencies is also in “most cases incomplete, difficult to understand, does not properly disclose the risks of virtual currencies and may therefore be misleading”, according to online publication Lexology.

Recently, the United Arab Emirates joined the ever-expanding list of countries to warn against cryptocurrencies and initial coin offerings. In the US, regulators are showing signs to be working closer with Congress, in the belief that they should work together to address market and regulatory gaps.