Maltese financial regulator has issued MFSA cryptocurrency investment warning today. The financial supervisor talks about 5 key digital currency risks. What are these?
31 July, AtoZForex – The Malta Financial Services Authority (MFSA) has issued an announcement for investors. The Maltese watchdog warns traders about the risks associated with the virtual currency. MFSA cryptocurrency investment warning talks about digital currency specifics in detail.
MFSA cryptocurrency investment warning
Just today, the Maltese regulator has issued an MFSA cryptocurrency investment warning. The MFSA informed the public that virtual currency is an unregulated digital instrument. The regulator states that a cryptocurrency is a form of money that is not equivalent to the traditional currencies.
In addition, the Maltese watchdog reminds investors that none of the central banks issue cryptocurrency. The MFSA stresses that it does not regulate the acceptance of payment of service in regards to the virtual currencies.
The supervisor also highlights the growing popularity of the digital currencies. Yet, it warns there is a number of potential risks when dealing with virtual currencies. The MFSA warns about the risk of losing money.
What are the risks associated with cryptocurrencies?
The regulator states the following in the official announcement:
‘The European Banking Authority had issued a warning about virtual currencies and this notice contains the salient aspects. ‘
Cryptocurrency risk #1: You might lose your money on the exchange platform
You can obtain cryptocurrencies from someone who owns them or via the exchange platform. Regulator notes that these exchanges normally have no regulation, thus, there is no legal protection.
Cryptocurrency risk #2: Fraudsters can steal your money from your digital wallet
Regulator explains that people normally store their virtual money in a ‘digital wallet’ on a computer. Even though these wallets have passwords and keys they are still vulnerable.
Cryptocurrency risk #3: No protection when using virtual currencies as a means of payment
The MFSA states that there will be no protection for your funds under the EU law when using cryptocurrencies as a means of payment.
Cryptocurrency risk #4: Cryptocurrencies are highly volatile
The value of digital currencies tends to change very quickly. Therefore, there is no guarantee that the cryptocurrencies’ value will remain stable.
Cryptocurrency risk #5: Criminals might misuse transactions in virtual currency
Due to the untraceable nature of cryptocurrencies, they provide a high degree of anonymity. This makes digital currencies vulnerable to misuse for criminal activities, according to the MFSA.
Considering these risks, the MFSA advises exercising caution when buying, holding or trading virtual currencies.
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