Swedish regulators warn consumers against crypto as markets tumble

Photo: Cointelegraph

Sweden's financial regulator thinks retail investors should stay away from financial products that have volatile cryptocurrencies as their underlying asset.

Sweden's financial regulator, Finansinspektionen, or FI, has issued a fresh warning to retail traders about the high risks and low consumer protections associated with crypto-related investments.

In an announcement published on Monday, the regulator wrote that while it had already issued a warning regarding the risks associated with Bitcoin (BTC) trading, it was publishing further advice following its completion of a wider study of the crypto-asset sector.

The FI said it has carried out a “thematic review of the market for financial instruments with underlying crypto-assets.” FI Director General Erik Thedeén said: 

“Products based on crypto-assets are unsuitable for most, if not all, retail consumers. The consumer protection available is inadequate, and crypto-assets are difficult, if not impossible, to value on a credible basis.”

Thedeén's view is compounded by the fact that consumer protection regulations in Sweden do not comprehensively protect investors from the risks tied to purchases of financial products or instruments that have crypto assets as an underlying asset. 

The FI’s warning coincides with a period of market volatility in the cryptocurrency spot and derivatives markets. Bitcoin dropped more than 17% in value over the last 24 hours, and $5.64 billion worth of BTC futures positions were liquidated in the same time period.

While the Swedish financial authorities’ scepticism about the health and impact of the cryptocurrency markets is evident, the country’s central bank is pursuing a research and development pilot for a centrally issued e-krona that could provide a complement to cash.

Reprinted from Cointelegraph, the copyright all reserved by the original author.