In the formal warning the authority notes that cryptocurrencies are not backed by any central bank, and warns in opposition to the volatility of virtual currencies, stressing that bargains are usually not entirely clear and company products are incomprehensible. It warned of the absence of buyer security and the risk of theft, given that cryptocurrency exchanges might be susceptible to hackers. In addition, in accordance to the regulator, info about cryptocurrencies is “often incomplete, complicated to comprehend or does not reflect the hazards of cryptocurrencies”.
The CSSF specially hones in on their perceived hazards of investing in ICOs. According to the authority, the ICO model is unproven and lacks verifiable info about the tokens and the funds gathered.
The Luxembourg regulator also created a issue of saying that it was not concerned about Blockchain technological know-how in use situations apart from cryptocurrencies, noting that Blockchain “could convey specified benefits in their use in the money sector and in different impressive initiatives.”
In addition to the CSSF, other European federal government regulators have also expressed skepticism about cryptocurrencies and ICOs lately. In Fall 2017, the German Federal Economic Supervisory Authority (BaFin) indicated that the invest in of coins or tokens offered in ICOs involves significant hazards for investors and described ICOs as “really speculative investments”. In November 2017, the European Securities and Marketplaces Authority (ESMA) also warned investors about the substantial hazards of the ICOs.