EU Authorities Warn of Limited Consumer Protection for Certain Crypto-Assets
The joint warning covers two things: that certain crypto-assets carry very high risk, and that consumer protection is limited or absent when something goes wrong.
The European supervisory authorities – EBA, EIOPA and ESMA – have jointly issued a warning to consumers about the risks of certain crypto-assets. The message is deliberately sober: crypto-assets can be extremely volatile and speculative, and consumers risk losing the entire amount invested.
Key points of the warning
- Many crypto-assets are high-risk products and are unsuitable for most retail investors, particularly for money they cannot afford to lose.
- Consumers often lack the protection that applies to regulated financial services – for example, there is no deposit guarantee scheme for crypto-assets.
- Aggressive marketing, including via social media and influencers, highlights potential gains while playing down the risks.
- Fraud and misleading offers occur, and money that is lost is in practice often impossible to recover.
What the warning does not say
The warning is not a ban and not a claim that all crypto-assets are scams. Nor does it say anything about future prices. What it emphasises is the asymmetry: the risk is borne by the consumer, while the safety nets that exist in traditional financial markets are often absent.
A service being legal does not mean the product is suitable for you – and a product being popular does not mean it is regulated.
Practical takeaways for readers
For anyone who already owns or is considering crypto-assets, the reasonable conclusion is to treat them as a high-risk category: do not invest money you need, verify who the counterparty is and what licence it holds, and be especially sceptical of offers promising high or guaranteed returns. Read the full warning from ESMA before citing it further.
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- Assessment of individual assets, projects or platforms.
- Legal analysis of what protection applies in a specific case.
- Forecasts about market developments.
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