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The performance of crypto-currencies and in the first place dubitcoinont enough to make envious. If the bullish rally of late 2020-early 2021 may have resembled in some aspects the bubble of 2017, the strong upward movement that we experienced a few weeks ago was less based on excessive speculation than on the democratization of crypto-currencies as a means of payment and the recognition of virtual currencies by financial players. Maybe you want to join the movement and invest in cryptoassets? Before positioning yourself on the very particular market of virtual currencies, it is better to know the regulatory framework and the reflexes to have to avoid scams and disappointments of all kinds.
Discover in this article the new legislative framework that surrounds crypto players, the reasons to be wary, and the tools and reflexes to adopt to avoid scams. A specific legislative framework
Crypto-currencies belong to the category of various goods and are regulated by the financial markets authority since the Sapin II law of 9 December 2016 on transparency, the fight against corruption and the modernization of economic life. The market watchdog is responsible in particular for ensuring the existence of sufficient guarantees on the quality of the intermediary and the transaction and on the balance of professional documents, which must not be limited to praising the past performance of the products processed but also warn the potential investor of the very significant risk that accompanies this type of investment.
With the Pacte law, the regulatory framework has become more precise and now, a specific regime for players in the sector has been put in place: this is the Digital Asset Service Provider (PSAN) regime, a concept that brings together all “financial intermediaries that offer different services relating to investment in crypto-assets” specifies the AMF. And the regulatory authority insists on the fact that these must be registered with the AMF “to be able to offer services for the custody of crypto-assets or access to crypto-assets or the purchase/sale of crypto-assets against currencies having legal tender”. Any unregistered actor may, since last December, appear on the AMF’s blacklists of service providers not authorised to operate. In addition, players wishing to approach new clients must apply to the AMF for optional approval. A sector that requires increased vigilance
This strengthening of the regulatory framework comes in a context of legislative vagueness that has allowed many more or less serious players, and sometimes even real scammers, to thrive on the web. It must be said that the crypto-currency market has seen the arrival of a crowd of investors eager to make quick and spectacular gains, without real knowledge of the specificities of this sector whose technical and technological characteristics escape many speculators.
First of all, crypto-currencies are considered atypical investments because they have the main characteristic: an expectation of return as high as their volatility. These are therefore particularly risky assets. This is why it is essential to invest in virtual currency only a very small part of your wealth (never exceed 5% to 10% of your financial wealth in atypical investments), which you do not need in the short-medium term, and which you are even ready to lose entirely.
Secondly, cryptocurrencies are virtual currencies based on blockchain technology, not regulated by a financial institution, whose mining is based on algorithms that are specific to it. Prospective investors who have not understood a traitor word of the previous sentence would do well not to go. Investing in cryptocurrency, like any investment, implies that one understands how it works, its characteristics, its strengths and its limitations. Tools and reflexes to adopt to avoid scams
Thus, it will be advisable to invest in crypto-currencies only if you understand what it is, having first determined which tokens seem most interesting to you.
Before any investment and any transaction in crypto-currencies, check that the intermediary has all the accreditations and in particular that he has a registration number with the AMF as a Digital Asset Service Provider (PSAN). You can also make sure that it is not on the AMF’s blacklist. If in doubt, do not deal with this provider.
Finally, no matter what precautions you have taken, always keep in mind that the risk is present (very present even) when investing in virtual currencies. A safe investment is not an investment without the risk of capital loss. Thus, investing in crypto-currencies with a trusted player, known and recognized, having the accreditations of the AMF and thus protecting you from a scam, does not mean that your investment does not make you run any risk since the volatility inherent in this type of asset makes you run a very significant risk of capital loss. Investing safe from a scam does not mean that your money is safe, far from it!