BaFin warns retail crypto investors of the risk associated with investing in cryptocurrencies
March 21, 2021 5:25 PM
Financial regulators in Germany expect retail crypto investors to be aware of the possible risks linked with cryptocurrency investments, particularly in this bull market.
The Federal Financial Supervisory Authority has issued out a warning to investors about the dangers tied to crypto investments.
According to an alert issued on the BaFin website for consumer protection on Friday, the financial regulators offered a warning to retail investors about investing in cryptocurrencies.
In the recent BaFin statement, retail crypto investors will have to be in the know about the possibility of incurring 100% losses from their crypto investments. With the EU lawmakers still working towards creating laws for digital currencies, regulators in Germany have already put in place some legal framework for crypto in the country.
In Germany, exchanges and other crypto-related businesses can only operate with a license from BaFin. The clear-cut regulation has prompted some German banks to ponder on opening crypto arms in the country. In late December 2020, 224-year-old German bank Hauck & Aufhauser declared plans to create a cryptocurrency fund.
However, BaFin said despite these laws in place there is currently no rule protecting retails investors in the crypto industry from losses, thus the warning.
BaFin has joined a host of other regulators to issues out warming to crypto investors as the bulls took charge of the market from late 2020. Regulators from Nigeria, South Africa, United Kingdom, and Thailand have handed out similar warnings.
Crypto investment is easier to access as they offer easy and decentralized means of participation, unlike mainstream finance which you need to be a qualified investor to access. More warnings from regulators are expected to come as the crypto market goes mainstream with huge firms amassing Bitcoin and other digital assets.