European regulators warn investors on high risks of crypto-assets

European financial watchdogs have issued a strong warning to savers across the EU: investing in crypto-assets, including cryptocurrencies and stablecoins, carries high risks and limited legal protection. The joint alert comes from ESMA (markets), EBA (banks), and EIOPA (insurance and pensions), aiming to raise awareness among retail investors.

The authorities launched a public campaign featuring an official warning, an information sheet, a podcast, and a video, emphasizing the importance of making informed investment choices and avoiding potential financial scams. While acknowledging that financial innovation—including crypto-assets—can enhance market efficiency and competitiveness, the regulators stress that these products are not suitable for all investors.

The alert underlines that only a portion of crypto-assets falls under the EU regulatory framework MiCAR, effective from December 2024. Available information for many crypto products may be limited or insufficient, and legal safeguards in case of losses are weaker than for traditional investments.

Investors are advised to ask three key questions before engaging in crypto transactions:

1. Are they aware of the risks and suitable for their financial situation?
2. Are the providers authorized under EU law to offer crypto services?
3. Are the devices used for purchasing, storing, or transferring crypto secure?

Finally, the authorities remind investors that protection in case of losses is limited, and there are no guaranteed compensation schemes like those available for traditional financial products.

This guidance, relaunched in Italy by Consob, reflects a broader EU effort to promote safe and informed participation in the rapidly evolving crypto market.