The European Union’s watchdogs for securities, banking, and insurance have issued a collective warning that consumers could lose all their money invested in crypto assets.
“Consumers face the very real possibility of losing all their invested money if they buy these assets,” the three authorities said. Bitcoin and Ethereum account for 60% of the market, which now includes up to 17,000 crypto assets, according to the regulators, who believe that consumers are mostly unaware of the risks associated with them.
“Consumers should be alert to the risks of misleading advertisements, including via social media and influencers,” the statement said. “Consumers should be particularly wary of promised fast or high returns, especially those that look too good to be true.” According to the statement, consumers should also be aware of the environmental impact caused by the high energy consumption of producing some assets.
Authorities in Europe start banning crypto advertisements
As the EU authorities warn consumers about misleading advertisements for crypto assets, others have taken more drastic steps.
Earlier this year, the UK’s Advertising Standards Authority (ASA) banned two advertisements from Crypto.com. The ASA alleged that both Crypto.com “ads were misleading because they failed to illustrate the risk of the investment” and “were irresponsible and took advantage of consumers’ inexperience or credulity.”
Crypto.com responded by removing the ads and remarking they were meant to emphasize the “speed with which users could buy cryptocurrency on their platform.”
Last year, the UK’s Financial Conduct Authority started putting pressure on social platforms to curb misleading crypto advertising. Then, earlier this year, it started to investigate 50 crypto-related firms, including some criminal probes.
Meanwhile, Singapore’s Monetary Authority also issued guidelines that restrict the promotion of cryptocurrency trading services to the general public.
“MAS strongly encourages the development of blockchain technology and innovative application of tokens in value-adding use cases,” said MAS Assistant Managing Director Loo Siew Yee. “But the trading of cryptocurrencies is highly risky and not suitable for the general public.”
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