BaFin, the German financial regulator, has warned investors about the risks involved in cryptocurrency investments.
It has been reported that in a consumer protection alert issued on its website on Friday, the regulator offered a cautionary tale about crypto involvement on the part of retail investors.
However, as part of its statement, BaFin echoed similar admonitions espoused by several European regulators including the European Securities and Markets Authority and the European Banking Authority.
According to BaFin, retail investors need to be aware of the risks of incurring 100% losses from their crypto investments. While European Union lawmakers are still working toward creating an EU-wide set of laws for digital currencies, German regulators already have some legal framework for digital assets in the country.
BaFin has warned retail crypto investors in Germany about the risks associated with cryptocurrencies. https://t.co/7OLo6Dj0sQ — Cointelegraph (@Cointelegraph) March 19, 2021
The report said that crypto custody providers, exchanges, and other businesses can only operate in Germany under license from BaFin. Under the somewhat clear-cut regulatory landscape for cryptocurrencies in Germany, some banks in the country have even sought approval to begin offering crypto custody solutions.
Likewise, in December 2020, 224-year-old German bank Hauck & Aufhauser announced plans to establish a cryptocurrency fund. Despite these laws, BaFin said there is no protection against losses for retail consumers in the cryptocurrency space, hence the warning.
Thus, crypto investment warnings are a popular occurrence among financial regulators across the globe, especially against the backdrop of the current bull market. Unlike mainstream finance with its qualified investor criteria, the crypto market offers easier market participation channels to “Mom and Pop” investors.
Source: Cointelegraph | Image: Fox13 Now
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