The European Union has warned that people who have invested in digital currencies and especially in Bitcoin, Ethereum and Ripple could soon lose all their money. Bitcoin which moved up by more that 1000% in 2017 has already lost half of that value this year after governments threatened to regulate the currency. This dramatic price fall has been described as both a cryptocalypse and a bloodbath.
The Banking, Securities and Insurance watchdog of the European Union yesterday said that the information passed to investors and potential crypto buyers is not complete and is difficult to understand. More to that people are not told the risks involved in digital currencies making the information provided misleading.
In the recent warning by the Union:
“Bitcoin and other currencies are subject to extreme price volatility and have shown a clear sign of a bubble. People buying digital currencies should be aware that there is a possibility of losing a large amount of their investment or even all the money they have invested.”
The European Commission Vice-President Vadis Dombrovskis had requested member countries to prevent cryptocurrencies from becoming a token of unlawful behavior. Vadis stated that: “There will be a meeting to assess the long-term situation of digital currencies beyond the current market swings.”
More to that Germany and France asked the G20 Summit to discuss the regulation of cryptocurrencies in the next meeting. The vice chair of the European Parliament economic affairs Markus Ferber said that it was time to enact regulatory measures on cryptocurrencies like other financial instruments. According to Ferber: “It’s important that the commission take the warnings serious and issue a legislative proposal in this regard as soon as possible.”
According to European Union regulation is made to force policy makers to have a balance between consumer protection and the prevention of money laundering. More to that cryptocurrencies are not supported by any central bank and therefore exchanges where investors can trade them are not regulated by the EU Law.
The European Union regulators concluded by stating that any losses from exchanges bursting or losses from cyber-attacks would not be covered by national protection schemes.