Beware cryptocurrencies, European authorities warn
Citing "clear signs of a pricing bubble" and other problems, regulators in Europe warn about investing in bitcoin and other virtual currencies.
Stephen Shanklandprincipal writer
Stephen Shankland has been a reporter at CNET since 1998 and writes about processors, digital photography, AI, quantum computing, computer science, materials science, supercomputers, drones, browsers, 3D printing, USB, and new computing technology in general. He has a soft spot in his heart for standards groups and I/O interfaces. His first big scoop was about radioactive cat poop.
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I've been covering the technology industry for 24 years and was a science writer for five years before that. I've got deep expertise in microprocessors, digital photography, computer hardware and software, internet standards, web technology, and other dee
A couple of weeks after cryptocurrencies like
plunged in value, European 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. 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 (ESMA) said.
Here's the bottom line (PDF) from Monday's cautionary notes : "You should not invest money you cannot afford to lose."
There's a good chance that if you sunk a lot of money into cryptocurrencies as their value soared last year, you already also noticed as their valuations plunged this year. Bitcoin is trading at a value of about $9,000, less than half its peak above $19,000 in December.
"ESMA is definitely trying to shut the stable door after the horse has bolted," said Toby Lewis, an analyst at Novum Insights.
But that doesn't mean the agencies should stand still. "Hopefully their warning about lack of regulation of the sector will be followed up by moves towards intelligent regulation of cryptocurrencies," he said.
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