The Polish regulator, the KNF has joined foreign counterparts and warned crypto investors about the risks of trading cryptocurrencies.
January 13, 2020 | AtoZ Markets – The Polish Financial Conduct Authority, KNF, is concerned about rising price volatility in the cryptocurrency market, the complexity of the products offered by companies, and the low level of investor protection.
KNF warns crypto investors as Bitcoin price surges
The Polish financial regulator has warned crypto investors that trading in the cryptocurrency market is fraught with losses. Clients looking to make quick money on the current rally run the risk of losing all their money due to high price volatility. KNF noted that brokers offer clients sophisticated cryptocurrency products, but they do not provide them with adequate protection.
Bitcoin price has grown by more than 300% over the past few months and has attracted the attention of retail investors. However, over the past three days, the market has slipped by 23%, which has resulted in losses for many novice traders.
“In such circumstances, companies begin to use aggressive marketing, gloss over risks or provide incomplete information about investing in cryptocurrency assets. Meanwhile, traders often lack the necessary knowledge and understanding of the risks associated with this form of investment,” the regulator noted.
In addition, the department noted the lack of clear regulation in the industry, which makes it difficult to understand the process and convert profits back to fiat. Thus, cryptocurrency investments are in a gray area and, unlike traditional financial markets, do not provide participants with the proper level of awareness and protection.
New wave of crypto fraud
KNF also noted an increase in the number of so-called investment cold calls. Moreover, to lull the vigilance of potential victims, some companies refer to the fact that their product and all transactions with cryptocurrency assets are regulated and controlled by KNF.
Callers are friendly at first, but very persistent. However, the regulator recommends not to contact such offers, since in most cases they are fraudulent.
The KNF website states that trading in cryptocurrency assets and trading platforms specializing in such assets are not prohibited by law. Accordingly, all transactions are legal in Poland.
Poland has already taken local measures to regulate certain digital assets. Some of them were quite strict, but the regulator did not introduce any complete bans on virtual money as an asset class. Instead, he, like his colleagues from other countries, chose to control the sector and prevent illegal activities.
Think we missed something? Let us know in the comment section below.