A couple of weeks after cryptocurrencies like bitcoin plunged in value, European Union authorities issued a warning Monday about the risks of investing in them.
Bitcoin and other virtual currencies “have shown clear signs of a pricing bubble” that could separate you from a lot of real currency, according to European supervisory authorities handling securities, banking, insurance and pensions, Cnet reported.
On top of that, cryptocurrency exchanges can have operational problems without any legal recourse right now if you lose your shirt, the European Securities and Markets Authority said.
Cryptocurrencies are the tech industry’s wild west. Even if you’re not investing in the thousands of virtual currencies available today or buying graphics cards at high prices to mine cryptocurrencies, there are risks that just visiting a website will make you part of somebody else’s attempt to get rich quick.
But it can’t all be dismissed out of hand. For example, the underpinnings of cryptocurrency transactions, called blockchain, are already spreading far beyond financial transactions, into everything from tracking diamonds to quickly removing contaminated food from store shelves.
Here’s the bottom line from Monday’s cautionary notes: “You should not invest money you cannot afford to lose.”
People who invested in bitcoin and other cryptocurrencies could soon lose all their money, the EU statement said.
Bitcoin, the most famous cryptocurrency, soared by more than 1,000% in 2017 but has already lost about half of its value this year as governments around the world threaten a clampdown on the unregulated market. Bitcoin is trading at a value of about $9,000, less than half its peak above $19,000 in December.
Japan Cryptocurrency Heist
Japanese cryptocurrency exchange Coincheck Inc, under pressure to better safeguard investors after the daring theft of $530 million of digital money last month, said it had on Tuesday filed a report with regulators on the hacking, Reuters reported.
The Financial Services Agency ordered Coincheck to raise its standards after the late-January hack, directing it to submit a report on the security of its systems and measures it would take to prevent a repeat. The report included Coincheck’s investigation into the heist and details of steps to bolster its risk management system, the exchange said in a statement. The submission of the report came as Coincheck lifted curbs on yen withdrawals.
The heist has exposed flaws in Japan’s system of regulating cryptocurrency trading, and raised questions over the country’s dash to oversee the industry—a move that was in sharp contrast to clampdowns by policymakers in countries such as South Korea, China and India.
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