Industry Updates

Swedish financial watchdog deems crypto ETPs unsuitable for retail investors

The FI says crypto tracking products are too risky as Bitcoin's value sheds 17.6% in four days

Jamie Gordon

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The Swedish Financial Supervisory Authority (FI) has called on issuers to reconsider selling crypto exchange-traded products (ETPs) to retail investors as it deems the strategies too volatile and complex to be appropriate. 

The Swedish regulator said there is a lack of protection for consumers and suitable regulation has yet to be brought into place to offer necessary reassurances.

The financial watchdog added that cryptos’ opacity, volatility and difficulties in valuing the asset class also make it unsuitable for most retail investors. 

Erik Thedéen, director general of FI, said: "Products based on crypto-assets are unsuitable for most, if not all, retail consumers. The consumer protection available is inadequate, and crypto-assets are difficult, if not impossible, to value on a credible basis. 

“That is why we are warning consumers about the risks associated with these financial products". 

The FI went on to make a direct plea to consumers, asking them to “think carefully” before buying a financial product containing crypto assets, before warning them once again that the risks are “significant” and the protections are “weak”. 

Issued on the 22 February, the FI’s warning that consumers are likely to lose money on their investment comes on the same day as bitcoin’s valuation shed more than 6% following an all-time-high of $58,332 just three days earlier.

Cryptocurrencies: The role of ETPs within a maturing market

Bitcoin has fallen to around $48,050, as at 23 February, equating to a drop of more than 17.6% within four days.

The Swedish regulator is not the first in Europe to warn about the dangers of cryptoassets. Last October, the Financial Conduct Authority (FCA) banned the sale of crypto ETNs to retail investors in the UK.

Exchange-traded crypto ETPs exist in Europe and the first crypto ETF launched in Canada earlier this month, however, the SEC is yet to approve such a product in the US with manipulation and liquidity fears taking precedence so far. 

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