The financial regulator in Luxembourg (CSSF) has issued a warning about the risks associated with investments in cryptocurrency and ICO.
In the official document, the regulator notes that cryptocurrencies are not issued by any Central Bank, very volatile, and trades are often not fully transparent. Also it refers to the lack of consumer protection and the risks of theft, as cryptocurrency exchanges are highly vulnerable to hackers. In addition, the regulator claims that the information about the cryptocurrency “is often incomplete, difficult to understand or does not reflect the related risks”.
According to the regulator, the ICO model is not proven, and the information about the tokens and the collected money is not verifiable.
The regulator of Luxembourg also said that he is positive to Blockchain, when it is not used in the field of cryptocurrencies and believes that the use of this technology “can bring certain advantages in the financial sector and in various innovative projects”.
Recently, other European regulators have also expressed skepticism about the cryptocurrency and ICO. The Federal financial supervision authority of Germany (BaFin) published the risks associated with investing in cryptocurrency and ICO. In November 2017, the European authority for securities and markets (ESMA) warned investors about the high risks ICO.