Europe’s financial regulators issued a joint warning on Monday advising consumers against buying virtual currencies (VCs), also known as cryptocurrencies.
In a statement, The European Supervisory Authorities (ESAs) — which encompasses the securities, banking, and insurance and pensions, regulators in the region — says it is “concerned that an increasing number of consumers are buying VCs unaware of the risks involved.”
Crytocurrencies “are unsuitable as investment, savings or retirement planning products,” the regulators say given that they are highly risky and largely unregulated.
“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,” ESAs says.
In addition to their concerns about a price bubble, the regulators note that the currencies themselves, and the exchanges that trade them, are not regulated.
“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.”