Authorities Warn about Risks of Cryptocurrencies

Total Croatia News

Croats are increasingly interested in investing in cryptocurrencies.

The Croatian Financial Services Supervision Agency (HANFA) has issued a warning to the public about trading in cryptocurrencies, saying that they often involve high-risk and unregulated activities, so potential investors must be aware of the possibility of losing all the funds invested and of the possible lack of legal protection, reports on December 28, 2017.

Given the increased interest in the so-called cryptocurrencies (such as bitcoin) and particularly with regards to Initial Coin Offers (ICOs), HANFA says that cryptocurrencies, as well as ICOs, are currently not explicitly regulated within the legislative framework of the Republic of Croatia, and there is no specific regulation at the EU level which would explicitly govern this matter.

Trading in cryptocurrencies and ICOs are often mentioned in the media as attractive activities that can quickly bring profits or attract funding for specific projects. ICOs are mostly conducted through the internet and social networks, often initiated outside of the Republic of Croatia and even outside of the European Union, and sometimes promoted by successful entrepreneurs and celebrities known to local or national markets, in order to gain the confidence of investors.

However, HANFA warns the public that these are often high-risk and unregulated activities, so potential investors must be aware of the possibility of losing all the funds invested and of a possible lack of legal protection. Given the various forms of cryptocurrencies, their structure, the way in which they are offered and the fact that there is no specific cryptocurrencies regulation at the European or national level, the assessment of the legal nature of cryptocurrencies will depend on how the ICO is structured in each particular case.

According to HANFA, the risks associated with cryptocurrencies ​​and ICOs are as follows: it is mainly an unregulated area, which is why fraud and other irregularities are more frequent; there is lack of reliable and relevant information; there is high risk of loss of part or all of the funds invested; there is an extreme volatility in the value of the investment and the inability exit the investment at any time; and there are risks related to IT technology used to create and distribute coins and tokens.

The European Union is currently discussing appropriate position regarding the issue of cryptocurrencies, taking into account regulations governing the financial markets, consumer protection, payment transactions, money laundering and financing terrorism issues, etc. In any case, there are currently no unified and standardised rules regarding cryptocurrencies and related technology.

Regulatory bodies and central banks of the member states of the European Union have issued warnings about possible risks related to investments in cryptocurrencies in the past period.

In conclusion to this warning and in addition to other warnings from various European and national regulatory bodies, HANFA calls on potential investors in cryptocurrencies to be responsible and cautious and, before making the investment decision, to make sure they are thoroughly informed about the characteristics and risks of investing in cryptocurrencies and ICOs.

Translated from


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