France’s prudential supervision authority remains cautious with regard to crypto-assets

Maria Nikolova

The ACPR pushes for strict regulations for crypto-assets and the companies offering such products.

France’s Prudential Supervision and Resolution Authority (ACPR) has earlier today published its Annual Report for 2017, with the regulator striking a cautionary note with regard to all sorts of investments in cryptocurrencies.

The ACPR says it has been keeping a close eye on the surge of the so-called “crypto-assets”. Although the underlying blockchain technology offers grand perspectives, the investment in crypto-assets, which cannot be considered currencies, presents an elevated risk for the investors given the extreme volatility of such products. That is why, the ACPR and the Bank of France call for strict regulations of crypto-assets and the companies offering such products. Such regulations should be focused on security and to mitigate the risks of money laundering. Such a framework must, of course, be implemented at an international level.

The French regulator also notes the rise of scams involving crypto-assets.

The cautious stance voiced by the ACPR echoes that from the Annual report for 2017 issued by France’s financial markets authority AMF. In its report, AMF said the number of complaints about toxic financial products, such as Forex and binary options, fell in 2017. There were 566 complaints about binary options and Forex products received by the regulator in 2017, compared to 1,656 in 2015. The drop was 67% when compared to 2015 levels and 48% when compared to 2016 levels.

A new theme that has sparked investor concerns, according to AMF’s report, is Bitcoin. Following the volatility of Bitcoin’s prices in the fall of 2017, the regulator has noted a rise in the number of enquiries about cryptocurrencies. The regulator says that as the complaints about binary options and Forex, as well as diamond investments drop, those about cryptocurrencies rise.

In November 2017, AMF published a special guide entitled “Investing in Bitcoin: Caution!”. In the document, the regulator stresses that Bitcoin, as well as all other virtual currencies (there are more than 4,500 of them), do not imply any protection for investors, as they are not like fiat currencies. The regulator provides some clarifications useful to the general public, informing it that Bitcoin may not be accepted as a payment means everywhere and that euro is the official currency in France.

Special attention is paid to the risks associated with the hype created around Bitcoin, given that various media publications and advertisements tout the virtual currency as an incredible investment opportunity. AMF emphasizes that the risks of investing in Bitcoin are at least twice as high as those associated with trading of “typical” CFDs. Investment in Bitcoin requires certain tech, IT and financial knowledge, the watchdog notes. Particular caution is urged with regard to ICOs, as well as all sorts of “mining” offers.

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