12 February 2018

ESAs warn consumers of risks in buying virtual currencies

The European Supervisory Authorities (ESAs) have issued a pan-EU warning to consumers regarding the risks of buying Virtual Currencies (VCs). The ESAs warn consumers that VCs are highly risky and unregulated products and are unsuitable as investment, savings or retirement planning products.

The ESAs are concerned that an increasing number of consumers are buying VCs unaware of the risks involved. VCs such as Bitcoin, are subject to extreme price volatility and have shown clear signs of a pricing bubble and consumers buying VCs should be aware that there is a high risk that they will lose a large amount, or even all, of the money invested.

Additionally, VCs and exchanges where consumers can trade are not regulated under EU law, which means that consumers buying VCs do not benefit from any protection associated with regulated financial services. For example, if a VC exchange goes out of business or consumers have their money stolen because their VC account is subject to a cyber-attack; there is no EU law that would cover their losses.

Some VC exchanges have been subject to severe operational problems in the past. During these disruptions, consumers have been unable to buy and sell VCs when they wanted to and have suffered losses due to price fluctuations during the period of disruption.

Press release

Full warning

© EBA