BaFin, the Federal Financial Supervisory Authority, has cautioned investors regarding the dangers associated with cryptocurrency investments.
On Friday, in a consumer protection warning on its website, the regulator issued a warning narrative about crypto involvement where retail investors are concerned.
To add to this statement, BaFin expressed the same warnings that European regulators promoted, for instance, the Markets Authority and the European Securities, and the European Banking Authority.
BaFin says that retail investors should know the dangers of experiencing 100% losses when they invest in crypto.
European Union lawmakers continue to form an EU-wide set of regulations for digital currencies; however, regulators in Germany already have a legal structure for digital assets in the state.
Crypto custody suppliers, exchanges, and other businesses can only work in Germany under the BaFin license. As reported, the state legalized digital securities in December 2020.
Under Germany’s somehow specific German cryptocurrency field, some of the state’s banks have even applied for a license to supply crypto custody solutions.
In December 2020, Hauck & Aufhauser, the 224-year-old bank in Germany, declared intentions to start a cryptocurrency fund.
Despite these regulations, BaFin stated retail consumers in the cryptocurrency arena have no safeguard against losses, leading to the caution.
Crypto investment cautions are prevalent among financial regulators worldwide, particularly against the present bull market’s background. Unlike regular finance with its eligible investor category, the crypto market provides more straightforward market participation accesses to ‘Mom’ and ‘Pop’ investors.
In 2021 alone, South African regulators to Thailand and the United Kingdom issued the same cautions. In February, the finance minister in Thailand expressed disapproval about the present cryptocurrency speculative increase and cautioned about the possibility of significant losses regarding retail investors.
In the meantime, the Crypto Assets legislative proposal from the European Commission’s Markets still raises some anxieties among sector stakeholders.
At the beginning of March, a detailed report on engagements and surveys was issued by the International Association for Trusted Blockchain Applications, showing that some MiCA offerings were unfriendly to startup development.