The European regulator warned about the risks of investing in crypto assets

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European Securities Authoritysecurities and markets (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 regulation of cryptocurrencies in the European Union (MiCA).

ESMA states that investmentcompanies can 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 emphasized:MiCA is already close to coming into force, with the process expected to be completed in 2025. Until then, cryptocurrencies will be considered unregulated assets in most European jurisdictions. Therefore, potential investors should not be mistaken about protecting their rights.

ESMA has addressed cryptocurrency offeringsproducts 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, disclosing when regulatory protections do not apply. In addition, firms must not mention their own legal status in advertising.

Let us recall that last year the ESMA managementproposed to completely ban cryptocurrency mining using 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.