- Getting your money back from a failed crypto venture depends on the terms of the service
- There is no protection covering customer losses
As no state protection exists, crypto investments could mean you lose all your money, warned German financial regulator Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) on Monday. This is another in a series of warnings to retail investors, CoinDesk reported.
In an amendment to a February warning, BaFin said getting your money back from a failed crypto venture depends on the terms of the service and the details of insolvency law in Germany.
Messy bankruptcies
The collapse of Terra Luna, Celsius, and similar have resulted in difficult bankruptcy cases. Traders and investors have to fight for their funds within the framework of extensive legal proceedings.
No guarantee for crypto assets
The regulator’s statement read:
There is no protection covering customer losses, such as deposit guarantee schemes or investor compensation schemes. Such systems do not exist for crypto assets.
In the EU, bank deposits are insured up to 100,000 euros in an effort to protect clients and keep banks from going bankrupt in the event of a market crash.
Recently, the EU reached a political deal on Markets in Crypto Assets Regulation (MiCA) with the goal of protecting clients and regulating crypto, but it has yet to take effect.
Meanwhile, financial regulators in the EU have warned prospective buyers to consider that if a get-rich-quick scheme seems too good to be true, it probably is.
