French regulator calls for caution with regard to Bitcoin hype
France’s AMF continues with its warning messages about the risks associated with Bitcoin and other virtual currencies.
Less than a month after the French financial markets authority AMF opened a consultation into initial coin offerings (ICOs), warning of the risks associated with such projects, the regulator continues to voice its concerns about virtual currencies.
On Wednesday, November 15th, 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.
The cautionary stance of AMF with regard to various forms of investment involving cryptocurrencies reflects that of other European regulators. The Financial Market Supervisory Authority (FINMA) of Switzerland, for instance, said in September that it was examining the booming segment of ICOs. FINMA also indicated that it was investigating a number of ICO cases in order to determine whether certain regulatory provisions have been breached.
FINMA also emphasized that ICOs are currently not governed by specific regulations, either globally or in Switzerland. Depending on how an ICO is structured, however, some parts of the procedure may already be covered by existing regulations, such as provisions on combating money laundering and terrorist financing, banking law provisions, and provisions on securities trading, the Swiss regulator said.
