The European Supervisory Authorities, including EBA, EIOPA, and ESMA, have issued a notice to consumers, warning that crypto-assets can pose risks and hold limited protection, if any.
The warning came together with a factsheet providing information on the new EU regulation on Markets in Crypto-Assets (MiCA) and what it means for consumers. The ESAs mention tangible steps that consumers can take to make informed decisions before investing in crypto-assets, including verifying if the provider is authorised in the EU.
Protecting consumers across the EU
As of December 2024, the EU MiCA regulation applies to specific types of crypto-assets and focuses on creating a consistent supervisory regime at the national and European level for issuers and providers of crypto-asset services across the block. The ESAs mention that, even if innovative financial products, including crypto-assets, can improve the efficiency, resilience, and competitiveness of the EU’s financial systems, consumers should take into account that not all crypto-assets are the same. The regulators warn that protection might be limited, based on the types of crypto-assets and crypto-asset services they are utilising.
As stated by the ESAs, some risks that can be associated with crypto-assets include extreme price movement, liquidity risks, misleading information, fraud, scams, and hacks, limited protection, and product complexity.
Furthermore, the ESAs recommend that consumers learn about the product or service and consider the risk before investing, verify that the provider of crypto-asset solutions is authorised in the EU, as well as ensure that any wallets leveraged to store their assets are secured. The regulators added that these steps are critical at a time when consumers’ interest in these solutions and products is scaling, in part because of the promotion on social media by finfluencers.
With the Joint ESAs factsheet, which is available in all EU languages, the regulators intend to offer an overview of what crypto assets are, which ones are regulated under MiCA and which are not, and the providers consumers may encounter.
