Norwegian FSA sees urgent need for crypto investor protection

Crypto investors in the US have regularly faced issues with the authorities, and for good reason: crypto is a relatively new and unregulated market. In recent times, the authorities have been clamping down on ICOs and crypto exchanges, and more pressure is expected in 2018. This has led to a lot of people fearing their crypto assets could be seized, and more generally, that their traditional investments could be reduced or seized if they were to buy crypto.

As the name suggests, the FSB is Norway’s financial supervisory body. The FSA is the only supervisory authority in Norway that can levy fines on companies for breaking the law. Since the Norwegian FSA can levy sanctions against companies, it is called the investor protection authority. This blog post came out a few days ago, and it states that the Norwegian FSA is worried that some of the younger cryptocurrency users may not be able to understand the potential risks associated with their investments in the form of tokens, and this is why the FSA has issued a statement on the subject, asking all the crypto investors to take precautions.

In today’s post we’ll look at one of the biggest security concerns facing the cryptocurrency industry. Most of the discussion so far has focused on the fact that ICOs are unregulated, and that there’s no real way for investors to know if the token they’re buying is actually what it claims to be, or if the project is a scam. However, there’s also a serious issue that must be addressed. In essence, investment protection is most likely to be a painfully-won right, rather than an automatic privilege. As a result, the rules that govern the industry can only be as strong as the weakest of players.. Read more about is cryptocurrency legal and let us know what you think.

As bitcoin (BTC) fell to a six-month low below $30,000 on Tuesday, Norway’s financial watchdog warned investors that the country’s cryptocurrency sector is largely unregulated.

The Norwegian Financial Supervisory Authority, or Finanstilsynet, published a communication on consumer protection for cryptocurrency investors on Dec. 22, noting that the agency does not currently supervise local cryptocurrency companies in terms other than money laundering :

These platforms are obliged to notify Finanstilsynet in accordance with the regulations on money laundering, but apart from money laundering supervision, Finanstilsynet does not supervise these entities.

Finanstilsynet also pointed out the main risks of trading cryptocurrencies, such as extreme price volatility and vulnerability to fraud. The agency found that cryptocurrency pricing is not transparent in many cases.

The agency added that there is an urgent need for a legal framework and investor protections to make cryptocurrencies a suitable form of investment for consumers. Finanstilsynet noted that the European Commission submitted a proposal last September to regulate the cryptocurrency market and plans to adopt rules on investor protection, market abuse and issuer licensing within five years.

Related: Norwegian authorities urge cryptocurrency users to declare their income in upcoming tax return

Until such regulations are in place, anyone considering trading in cryptocurrencies should think carefully and understand that there are significant risks associated with such investments. Consumers who want to try it should not invest more than they can afford to lose, Finanstilsynet concludes.

Norway is known as the most cashless country in the world: Only 4% of payments in the country are made with banknotes and coins. In response to the massive decline in the use of cash, the Central Bank of Norway launched a study of the central bank’s digital currency in April 2021.

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