The three ESAs warn consumers on the risk of virtual currencies

The three ESAs (consisting of the European Securities and Markets Authority, the European Banking Authority and the European Insurance and Occupational Pensions Authority) issued a warning to consumers on the high risks of buying and/or holding virtual currencies such as Bitcoin, Ether and Ripple (VCs).

The warning follows the fact that there has been an increasing number of consumers buying VCs, with the expectation that the value of the VCs will continue to grow but without being aware of the high risk of losing their money invested.

The risks that consumers are exposed to include:

  • extreme volatility and bubble risk;
  • absence of protection;
  • lack of exit options;
  • lack of price transparency;
  • operational disruptions;
  • misleading information; and
  • unsuitability of VCs for most purposes, including investment or retirement planning.