The European Securities and Markets Authority (EMSA) has issued a warning on crypto assets following another spike in the price of bitcoin.
In a statement, EMSA said bitcoin’s sharp uptick in price “reflects an intensifying interest in relation to crypto-assets and confirms their highly volatile nature.”
“ESMA is cautioning investors against being caught up in this hype. They should reflect carefully before making any financial decision and consider their financial needs and objectives,” the authority added.
It comes after the price of bitcoin skyrocketed as high as $106,500 in December following the re-election of Donald Trump, who has been a vocal advocate for cryptocurrencies.
ESMA added despite the European Union’s approval of the Markets in Crypto Assets (MiCA) in April, “the inherent risks of investing in crypto assets remain”.
The European Central Bank (ECB) previously warned the damage from the bitcoin price boom "will be massive", calling the Securities and Exchange Commission’s (SEC) approval of spot bitcoin ETFs “the naked emperor’s new clothes”.
Further complicating the matter, differing regulatory approaches to UCITS-eligible assets are particularly notable when comparing regional variations in the treatment of crypto assets.
German regulator BaFin and the Spanish regulator the Comisión Nacional del Mercado de Valores’ (CNMV) take a relatively more lenient approach, with both allowing investors exposure to financial instruments that have performance linked to cryptocurrencies, while the Central Bank of Ireland (CBI) takes a more cautious approach by allowing indirect exposure.
Speaking at ETF Stream’s ETF Ecosystem Unwrapped 2024, Helene Bussieres, deputy head of asset management at the European Commission said Europe needs to change the rules on cryptocurrency to ensure a harmonised approach across the continent.
More broadly, investors have previously questioned the inherent investment case for cryptocurrencies, calling them the “ultimate incarnation of the mentality that says price does not matter.”
