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 firms can provide both regulated and unregulated products and services related to digital assets.
And the products and services are presented as an alternative to financial instruments, but go beyond the current regulation of financial services in the European Union.
The regulator emphasized: MiCA is close to coming into force – the process is expected to be completed in 2025.
Until then, cryptocurrencies will be considered unregulated assets in most European jurisdictions. Therefore, potential investors should not be misled about protecting their rights.
ESMA has asked companies offering cryptocurrency products and services to notify users of the risks involved.
Companies must inform their customers about the regulatory status of products and services, disclosing when regulatory protection does not apply.
In addition, firms should not mention their own organizational and legal status in advertisements.
Recall that last year ESMA management proposed to completely ban the mining of cryptocurrencies on the Proof-of-Work (PoW) consensus algorithm.
The ban is necessary to motivate miners to mine cryptocurrencies in a more environmentally friendly way, ESMA explained.