Virendra Pandit
New Delhi: In what is viewed as the clearest and most direct warning yet against crypto assets, all three financial regulators of the European Union—on securities, insurance, and banking—have warned wealth-chasers that they could fall prey to scams and end up losing all the money they invest in such dubious deals.
Some have even dubbed crypto-assets as ‘wealth destroyers!’
Several countries, including India, are worried over the growing interest of the people with the get-rich-quick mindset in crypto-assets, a new type of gambling with no accountability.
The finance ministry had recently said that cryptocurrencies like Bitcoin or Ethereum will never become legal tenders. Finance Minister Nirmala Sitharaman had also proposed to introduce Digital Rupee, using blockchain and other technologies, to be issued by the RBI starting 2022-23.
In a joint statement on Thursday, the EU regulators said consumers in crypto-assets “face the very real possibility of losing all their invested money if they buy these assets.”
They also said the consumers have no protections or recourse to compensation under existing EU financial services law.
According to the media reports, regulators are worried more consumers are buying 17,000 different crypto-assets, without being fully aware of the risks involved. These crypto-assets include Bitcoin and Ethereum, which account for 60 percent of the market.
“Consumers should be alert to the risks of misleading advertisements, including via social media and influencers. Consumers should be wary of promised fast or high returns, especially those that look too good to be true,” the statement said.
They should also know energy consumption for producing some crypto-assets is high and impacts the environment also, the regulators said.