Payments Report 2021

New opportunities and challenges with money in new forms

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Crypto currencies lack consumer protection

Published: 3 November 2021

Crypto currencies largely lack the regulation with which traditional assets, such as equity and money market funds, comply and this means that they lack consumer protection and are therefore higher risk investments. In Sweden, Finansinspektionen has warned of the risks linked to trade in crypto currencies because of the inadequate consumer protection and that crypto currencies are difficult or impossible to valuate in a reliable way.

In September 2020, the European Commission presented a proposal for a regulation on markets for crypto currencies, the so-called MiCA regulation, which is intended to regulate issuers and suppliers of services for crypto currencies. At present, crypto currencies are not covered by the EU regulations for financial services – apart from some of the regulations for combating money laundering and terrorist financing. The proposal, which can be expected to begin to apply in full some time during 2023/2024, contains increased requirements of suppliers of services linked to crypto currencies. One purpose is to reinforce consumer protection and reduce the risks of market abuse. The proposal also aims to manage the threats to financial stability and the national currencies that might arise if stablecoins were to become more common.