Consumer Warning on Virtual Currencies

Consumer warning Consumers are warned about the risks of buying or investing in “virtual currencies” (VCs) and cryptocurrencies.

VCs such as Bitcoin, Ripple and Ether are a form of unregulated digital money that can be used as a means of payment.

However they do not have legal tender status, and are not guaranteed or regulated by the Central Bank of Ireland, or any other central bank in the EU.

Risks of virtual currencies

If you buy a VC, or a financial product that invests in VCs, you are exposed to a number of risks including:

• Extreme volatility
Most VCs are subject to extreme price volatility meaning there is a high risk that you will lose some or all of your money.

• Absence of protection
VCs are unregulated under Irish and EU law. If you buy or hold them you lose access to the guarantees and safeguards associated with regulated financial services.

• Misleading information
Information given to consumers who buy VCs is usually incomplete, difficult to understand and does not properly disclose the risks.

Buying a VC from a firm that is regulated to provide financial services does not protect you from the above risks.

How to protect yourself

VCs are unsuitable for most consumers, including those with a short-term investment horizon, and especially those pursuing long-term goals like saving for retirement.

If you do decide to buy VCs, or a financial product that gives you exposure to VCs, you should fully understand the risks you are taking.

You should not invest money you cannot afford to lose.

See also:

• ESMA, EBA and EIOPA warn consumers on the risks of Virtual Currencies

• Alert on Initial Coin Offerings