While the crypto sector is increasingly regulated in Europe, the region’s authorities are warning investors that these protections aren’t uniform, and crypto investing remains risky.
The big three European regulators — the European Banking Authority (EBA), European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA) — issued a joint warning Monday that cautions investors about the fledgling crypto sector, and aims to spell out the implications of the region’s new regulation, the Markets in Crypto-Assets (MiCA), which took effect at the start of the year.
“While innovative financial products, including crypto assets, may enhance the efficiency, resilience, and competitiveness of the EU’s financial system, consumers should be mindful that not all crypto assets are the same,” the regulators said. Investor protections vary depending on the types of crypto assets and crypto services that are involved, they added.
“Not all crypto assets and crypto asset services are equal, nor are they regulated in the same way (if at all),” regulators warned. “While a new regulation known as MiCA is now in place in the EU and regulates activities involving certain crypto assets, most crypto assets typically remain volatile and highly risky.”
In particular, the regulators warned about the often extreme volatility of crypto sector, liquidity risks, misleading disclosure and the threat of fraud, scams and hacks.
While the MiCA regime provides some investors protection for specific types of crypto assets and services, these protections “are not as extensive as those applicable to more traditional financial products,” the joint investor alert warned.
Against that backdrop, the regulators called on investors to do their due diligence, check registration, and ensure that the wallets used to store their crypto assets are adequately secured — measures that, they said, remain important, particularly as the sector is being aggressively promoted on social media by finfluencers.
Additionally, while the MiCA regime generally took effect this year, in some countries there’s a transition period that runs until July 2026, which means that its new protections aren’t in force yet in those markets.
The warning comes as global regulators launched World Investor Week, which is a global campaign to raise awareness of the importance of investor education and protection.
This year, the main themes of the International Organization of Securities Commissions’ (IOSCO) campaign include highlighting the risks posed by the crypto sector, the impact of new technologies and AI, and the basic of fraud and scam prevention.
“In today’s fast-paced markets, technology is transforming how people invest. For students and young investors, digital platforms are now often the gateway into the world of investing, and very convenient. But convenience is not enough. Smart investors stick to the basics: doing careful research, staying diversified and being prepared for unexpected events,” said Jean-Paul Servais, IOSCO chair and chair of the Belgium Financial Services & Markets Authority (FSMA), in a release.
“Where scams are concerned, relationship investment scams in particular are estimated to have caused people to lose tens of billions of dollars globally,” added Camille Beaudoin, director of financial education expertise and partnerships at Quebec’s Autorité des marchés financiers (AMF) and chair of the IOSCO committee leading this year’s campaign.