Germany: Beware of Retail Crypto Investments

The German Federal Financial Supervisory Authority (BaFin) has warned about retail investments in bitcoin. With the price of bitcoin going through the roof (60k) it is only logical that many see buying bitcoin as the smartest investment they could make. Although the market has had sudden falls throughout these months, it has shown a speedy recovery with an upward trend.

The problem with retail investments is that they can be especially vulnerable to downturns and constant changes in this market, since they are usually natural persons, with a lower level of information than institutional investors and without greater room for maneuver in the event of eventualities in the market. With which, if the individual wishes to invest in this market, at least, he must have full information about the risks that this entails.

In this sense, BaFin informs retail investors that they should have in the spectrum of possibilities the fact that they could lose 100% of their investment. Cointelegraph (And this should be very clear, especially if that money is needed to cover some important debt, or simply if that money is vital for the investor). The fact that there is no protection against the losses of retail investors should be fully known to the investor before investing.

The European Union is working on a package of laws for virtual currencies, even German regulators have an outline of the applicable legal framework, however, while such provisions "are still in the oven" they had the need to launch these warnings to avoid possible losses massive given the bullish environment bitcoin finds itself in.

But BaFin was not the only national authority to issue similar warnings, as did the European Banking Authority, the European Insurance and Business Pensions Supervisory Authority and the European Securities and Markets Authority, who likewise they pointed out that the deregulation of this market makes it necessary for them to make these warnings directly.

Let us remember that at the end of last year BaFin legalized the use of these digital securities in its country, however, it considers it prudent to expose investment risks.

Other regulators around the world, such as South Africa, the United Kingdom and Thailand, have issued similar cautionary notices to inform about the risks of loss.

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Marilú Lazo
Lawyer from the Pontificia Universidad Católica del Perú (PUCP). Director of The Crypto Legal Blog, she has experience in corporate advice, consumer protection, as well as in matters of personal data protection and new technologies.


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