Monday morning news slammed with cautions and alerts for cryptocurrency investors.
European authorities like The European Securities and Markets Authority, or ESMA, the European Banking Authority, or EBA, and the European Insurance and Occupational Pensions Authority have recommended the cryptocurrency investors to stay vigilant as the absence of the regulating rules could make it a vicious merchandise.
“The [virtual currencies] currently available are a digital representation of value that is neither issued nor guaranteed by a central bank or public authority and does not have the legal status of currency or money”, The regulator stated.
He further added by saying that it is high risk as, neither they offer any legal security or EU law on the possession, nor backed by any substantial assets.
Bitcoin BTCUSD, +3.22% has boomeranged more than 50% of the trade under $6,000 a coin on February 6, which sunk from exorbitant rate $19,000 in late December.
Moreover, the connection between bitcoin and equities has collapsed, the once priced as prominent digital currency slashed from the US inventory.
Residing Jeopardy
A numerous risk forewarns were sketched by the regulators like volatility and zero transparency.
The European ombudsmen even stated that the cryptocurrency business has a financial bubble mannerism, a resonated utterance all around the world.
A leading global investment banking, securities and investment management firm, Goldman Sachs stated that most of the cryptocurrencies would burn out completely over the years.
In addition, the regulators pointed that trading to real currency could lead to price manipulations and discrimination as the capital establishment of VCs are often opaque. As a result, you will not receive a legit price when merchandising VCs.
The US financial regulators and the legislature have joined hands to work together towards confronting the market inefficiencies.
Needed actions by Investors
In spite of enormous risks involved in trading VCs, the officials advocate investors to understand the characteristics and the hazards completely. They added to not finance which they cannot afford to be forfeited.
