The Portuguese Securities Market Commission (CMVM) is reportedly keeping a close eye on the “bitcoin euphoria” that’s sweeping the nation, as according to local publication ECO it’s supervising investment banks and brokerage firms in the country who sell products associated with the cryptocurrency.
With the move, the Securities Market Commission plans to create an exhaustive list of every product that has bitcoin or any other cryptocurrency as an underlying asset available on the market, in order to protect private investors said to be most vulnerable to the “digital currency euphoria.”
The regulator, led by Gabriela Figueiredo Dias, wants to determine which financial intermediaries in the country are currently selling complex bitcoin-related products that allow investors to indirectly purchase cryptocurrencies. Moreover, CMVM is reportedly trying to know how these intermediaries are marketing these financial products, and what information is being transmitted to investors.
Per ECO, CMVM is also on top of Initial Coin Offerings (ICOs) as it recently warned potential investors about the risks of these token sales, as these aren’t regulated, can be extremely volatile or lack liquidity, and can lead to fraud. The publication adds that CMVM can do little about bitcoin in the country, as it isn’t “exactly a financial asset,” so all it can do – presumably for now – is issue warnings.
“80% of Investments Lead to Total Loss”
Although ECO accurately points out that cryptocurrencies such as Bitcoin, Ethereum, and Litecoin aren’t regulated and can’t be controlled by authorities – and that this is part of the reason they’re attractive – it adds in a subtitle that “80% of investments lead to total loss.”
The subtitle is derived from an European study conducted by ESMA that showed that 80% of investors who put their money in complex financial products with high leverage that have virtual currencies as underlying assets lost all of their funds. The keywords here being “high leverage.” Nevertheless, CMVM warns investors should be careful when putting their money in these financial instruments.
Given the risks these products incur, the regulator is reportedly going after brokerages allowing investors to purchase them. Binary options and ETNs (Exchange Traded Notes) are reportedly among the products that may lead to sudden losses the regulator is going after.
According to ECO, there are only two brokerages allowing investors to purchase cryptocurrency-related ETNs in the country. In one of them, according to the publication, the ETN surged from €33,56 to €719,9 in one year, giving investors a 2,000% return.
As covered by CCN, earlier this year Portugal’s central bank director stated that “bitcoin isn’t a currency,” notwithstanding the country wanting to tax bitcoin users, despite the lack of regulations. Portugal’s central bank has also recently issued a warning against OneCoin.