This page is for customers in the European Economic Area (EEA). It explains key risks linked to buying, holding, and transacting in crypto-assets, and how the EU’s Markets in Crypto-Assets Regulation (MiCA) improves standards for crypto-asset services while not removing the underlying investment risks.
Under MiCA, crypto-asset service providers (CASPs) must, among other things, act honestly, fairly and professionally, provide information that is fair, clear and not misleading, and warn clients about the risks of crypto-asset transactions.
Even so, crypto-assets remain high risk.
What are the key risks?
1) You could lose all the money you invest
Many crypto-assets are highly volatile. Prices can move quickly and sharply (up or down), and losses can happen fast.
Some projects can fail entirely, which can result in a token becoming illiquid or worth close to zero.
2) You should not assume you’ll be protected if something goes wrong
Crypto-assets are not the same as bank deposits. In general, losses on crypto-assets are not covered by deposit guarantee schemes or investor compensation schemes (coverage depends on the product’s legal classification and where/how it’s held).
MiCA requires certain “stablecoin” disclosures to make this clear. For example, crypto-asset white papers for e-money tokens must warn that they are not covered by investor compensation schemes or deposit guarantee schemes.
Regulation can improve conduct and transparency, but it does not guarantee you will get your money back if markets move against you, an issuer fails, or a service provider becomes insolvent.
3) You may not be able to sell your investment when you want to
There is no guarantee that you can sell a crypto-asset quickly or at a “fair” price. Liquidity can disappear during stressed markets, and spreads can widen significantly.
Trading can also be disrupted by technology outages, network congestion, or other operational events.
4) Security, fraud, and operational risks are real
Crypto markets can be targeted by hacks, phishing, scams, and other financial crime.
You can lose access to crypto-assets permanently (for example, if credentials are compromised or lost).
Transactions may be difficult or impossible to reverse, depending on how they are executed.
5) Crypto-asset investments can be complex
Crypto-assets can be hard to understand (technology, token economics, governance, legal structure, and custody arrangements).
Where a crypto-asset white paper exists, it is intended to help you understand the project and risks—but it is important to know that MiCA white papers include a clear statement that they are not approved by an EU competent authority and that the issuer is responsible for their contents.
MiCA also expects CASPs, for certain services (like operating a trading platform or exchanging crypto-assets), to provide hyperlinks to relevant crypto-asset white papers and to warn clients about risks.
You should still do your own research and be cautious of offers that sound too good to be true.
6) Not all crypto-assets are the same
Different crypto-assets carry different risks:
“Stablecoins” can still fail or lose their peg. Some “algorithmic” models can be especially fragile.
Some crypto-assets may fall outside MiCA (for example, if they qualify as a financial instrument under other EU rules), and the protections and risks may differ.
7) Don’t put all your eggs in one basket
Concentrating your money in one asset, one token type, or one sector is risky. Consider diversification and only investing amounts you can afford to lose.
Not all cryptoassets are the same, and it is crucial to know the specific risks before you invest. Check out our asset risk summaries, where we break down the key risks for different types of cryptoassets. These summaries provide a clear picture of what you need to be aware of when considering investments in the diverse world of digital assets. Take a moment to read through our asset risk summaries, empowering yourself with the knowledge to make well-informed decisions in the dynamic realm of crypto investing.
If you have a complaint
MiCA requires CASPs to have effective and transparent complaints-handling procedures, allow complaints to be filed free of charge, and investigate and respond within a reasonable period.