The main European regulator of markets has warned investors against the pitfalls of buying new crypto coins, an experimental and unregulated form of online financing especially used by start-ups.
The European Securities and Markets Supervisory Authority (ESMA) said on Monday that the Initial Offers of Coins (ICO) were unregulated, volatile, non-transparent and technologically untested.
"ICOs are extremely risky and highly speculative investments," said the agency, adding that there was a risk of "total loss of your investment".
"Most coins or tokens … have no intrinsic value other than … to use them to access or use a service / product," said the agency, warning the issuers of currency that they might be subject to the regulations in force.
After the regulators of Swiss and Wall Street, ESMA is the latest to require a closer look at cryptocurrencies. China has banned ICOs.
By creating and issuing digital tokens, entrepreneurs can sometimes raise tens of millions of dollars in a matter of hours – with little regulatory oversight. Token holders do not usually receive a share in a project or security.