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European Regulators Warn Consumers On Risk Of Virtual Currencies


Three European Union regulators have issued a warning to consumers across the EU related to investing and trading in virtual currencies.

The European Supervisory Authorities (ESAs) for securities (ESMA), banking (EBA), as well as insurance and pensions (EIOPA) have in a release stated that Bitcoin and other virtual currencies "have shown clear signs of a pricing bubble". They added that these virtual currencies are not the ideal investment, savings or retirement planning products.

The three ESAs expressed concern over increased number of consumers buying virtual currencies, unaware that they are highly risky and non-regulated products.

The regulators added that the cryptocurrency exchanges are not regulated under EU law. This puts the consumers' investments at risk as the exchanges are vulnerable to either cyber attack or go out of business.

Crypto currencies such as Bitcoin, Ripple, Ethereum and many others have been highly volatile of late with significant daily fluctuations in their prices.

Looking at the value of Bitcoin, it increased sharply in 2017 from around $1,000 in January 2017 to nearly $20,000 in mid-December and then fell almost 70 percent to just below $7,000 in early February 2018.

It has more recently recovered about 20 percent from the low, and is currently trading at around $8,600. The total market capitalization of the 100 large virtual currencies, is estimated to exceed $400 billion globally as of today.

In the Eurozone, German and French finance ministers and central bank governors have sought joint action by the G20 group of advanced and developing countries to tackle the risks posed by cryptocurrencies.

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