Risks related to cryptocurrencies

Abstract

Investors and service providers in the cryptocurrency market are exposed to significant risks. High volatility, technological characteristics and anonymity create: investor risk, risk associated with money laundering and financing of terrorism and systemic risk. The market is full of fraudsters and there are too few adequate rules to protect investors and prevent market manipulation and insider trading. Also, the value of cryptocurrencies is very volatile, and their prices change from day to day. Investors in cryptocurrencies are exposed to higher risks of loss than investors in other assets. Cryptocurrencies can potentially be used for money laundering and financing of terrorism. Negative consequences can be reflected through economic as well as overall social disruptions that manifest themselves through disruption of the monetary system, economic and social stability, transparency and efficiency of the financial system, etc.