ESMA further explained the risks behind trading crypto-assets. Many of them are are subject to sudden and extreme price movements and are speculative as their price relies solely on consumer demand. These products are often aggressively advertised to the public with market information that often can be unclear, incomplete, inaccurate or even purposefully misleading.
The regulator further stated:
Numerous fake crypto-assets and scams exist and you should be aware that their sole purpose is to deprive you of your money using different techniques, for example phishing.
In addition, how prices are determined and the execution of transactions at exchanges is often not transparent. Moreover, the distributed ledger technology underpinning crypto-assets can bear specific risks related to cyber-attacks. Several issuers and service providers for crypto-assets, including crypto exchanges and wallet providers, have experienced such problems.
The EU Parliament’s Committee on Economic and Monetary Affairs recently voted and rejected the proposed bill that would have effectively banned Bitcoin and many other cryptocurrencies in the European Union over their energy consumption.
