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European Securities and Markets Authority(ESMA) has published an official warning about the risks of investing in cryptocurrencies, which remain relevant until the entry into force of the law on the regulation of cryptocurrencies in the European Union (MiCA).
ESMA states that investment companiescan provide both regulated and unregulated products and services related to digital assets. Moreover, products and services are presented as an alternative to financial instruments, but at the same time go beyond the current regulation of financial services in the European Union.
The regulator stressed:MiCA is already close to coming into force - the process is expected to be completed in 2025. Until then, in most European jurisdictions, cryptocurrencies will be considered unregulated assets. Therefore, potential investors should not be confused about the protection of their rights.
ESMA turned to crypto-currency providersproducts and services to companies with a request to notify users of the associated risks. Companies are required to communicate to their customers the regulatory status of products and services by disclosing information when regulatory protections do not apply. In addition, firms should not mention their own organizational and legal status in advertising.
Recall that last year the leadership of ESMAproposed to completely ban the mining of cryptocurrencies on the Proof-of-Work (PoW) consensus algorithm. The ban is necessary in order to motivate miners to mine cryptocurrencies in a more environmentally friendly way, ESMA explained.