In a document released on March 17, the European Supervisory Authorities (EBA, ESMA and EIOPA – the ESAs) warns consumers on the risks of investing in cryptoassets due to their highly speculative nature.
To make informed decisions, the ESAs advise consumers to consider the following:
Be informed about the specific risks of cryptoassets and related products and services
Have a good understanding of the key risks of cryptoassets : extreme price movements, misleading marketing material and other information and absence of protection as most of cryptoassets and the selling of products or services in relation to cryptoassets are unregulated in the EU. Other elements to consider are the complexity of these assets, the risk of fraud and malicious activities, the risk of market manipulation, the lack of price transparency and low liquidity as well as the risk of cyber-attacks.
Consider their risk tolerance and risk appetite.