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December 13, 2013updated 04 Apr 2017 4:09pm

EBA warns consumers on risks associated with Bitcoin

The European Banking Authority (EBA) has issued a warning to consumers on a series of risks derived from buying, holding or trading virtual currencies such as Bitcoins.

By Verdict Staff

The European Banking Authority (EBA) has issued a warning to consumers on a series of risks derived from buying, holding or trading virtual currencies such as Bitcoins.

The EBA said that there is no protection for consumers through regulation when using virtual currencies as a means of payment and may be at risk of losing their money.

Additionally, consumers should also be aware that exchange platforms may be unregulated and no specific regulatory protections currently exist in the EU that would protect consumers from financial losses if a platform that exchanges or holds virtual currencies fails or goes out of business.

The EBA added that the digital wallets containing consumers’ virtual currency stored on computers, laptops or smart phones are not resistant to hackers and consumers are not protected by any refund rights under EU law.

As transactions in virtual currency provide a high degree of anonymity, the consumers may be misused for criminal activities, including money laundering.

In the event such misuses, law enforcement agencies may close exchange platforms at short notice. Also, consumers will be prevented from accessing or retrieving any funds that the platforms may hold.

Meanwhile, the EBA has recommended that consumers buying virtual currencies should fully understand their specific characteristics and not use ‘real’ money that they cannot afford to lose.

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