The Financial Supervisory Authority of Norway (Finanstilsynet) has cautioned investors about investing in cryptocurrencies as the price of bitcoin plunged Tuesday. “There is a strong need for a legal framework and investor protection if cryptocurrency is to be able to become a suitable form of investment for consumers,” the regulator’s consumer coordinator wrote.
Norway’s Financial Regulator Warns of Crypto Risks
Norway’s financial regulator, Finanstilsynet, posted a notice on its website Tuesday warning about the risks of investing in bitcoin and other cryptocurrencies. It is written by the regulator’s consumer coordinator, Jo Gjedrem, a lawyer from the Norwegian Consumer Authority, the Finanstilsynet described. The warning was posted as the price of bitcoin dipped below the $30K level Tuesday.
Gjedrem began by noting that Norwegian consumers increasingly sought new investments during the coronavirus pandemic and “Cryptocurrency has received the attention that very few other investment options have.” He detailed, “The technology is new and exciting, high-profile investors and celebrities have bought in, and influencers are marketing them on social media.”
However, the Finanstilsynet’s consumer coordinator cautioned:
Most cryptocurrencies are subject to extreme price fluctuations. The risk of loss is high … The market has also attracted significant criminal activity. Scammers use spam, computer viruses, fake drawings and a variety of other techniques to deceive consumers.
He explained that cryptocurrency is largely unregulated in Norway, and there is no statutory consumer protection for cryptocurrency buyers, unlike with traditional investments.
Furthermore, Gjedrem emphasized that cryptocurrency trading platforms in Norway are only obligated to comply with anti-money laundering (AML) provisions and the Finanstilsynet does not supervise them beyond that.
Gjedrem noted:
There is a strong need for a legal framework and investor protection if cryptocurrency is to be able to become a suitable form of investment for consumers.
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The lawyer pointed out that the European Commission presented a proposal in September 2020 to regulate the cryptocurrency market. The proposed rules, which are expected to be in place in four years, cover various areas, including market abuse, issuer authorization, and investor protection.
“Until such regulations are in place, anyone considering trading in cryptocurrency should think carefully and understand the significant risk that such investments entail,” the Finanstilsynet post concludes. “Consumers who want to try this with open eyes should not invest more than they can afford to lose.”
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