CMVM contacts banks and brokers to stop Bitcoin euphoria

  • ECO News
  • 13 December 2017

The Portuguese market regulator CMVM is on the alert about investors' euphoria concerning digital coins and is performing a supervisory action with intermediates that sell products related to Bitcoin.

CMVM, headed by Gabriela Figueiredo Dias, is on the alert about Bitcoin. Paula Nunes/ECO

The Portuguese market regulator CMVM is closely monitoring the euphoria around Bitcoin and is even moving forward with a supervisory action across investment banks and brokers operating in Portugal which sell financial products tied to the digital coin, ECO knows.

With this supervisory action, the Portuguese Securities Market Commission (CMVM) aims to make a comprehensive assessment of all financial products which have Bitcoin or other cryptocurrencies as an underlying asset, in a broader supervisory action aiming to reinforce the protection of private investors, who are more vulnerable to the euphoria around digital coins.

ECO ascertained that CMVM is analyzing which financial intermediates operating in Portugal are selling these complex products that allow investors to indirectly purchase these cryptocurrencies. On the side, the regulator headed by Gabriela Figueiredo Dias is inquiring intermediates about how they are commercializing these financial products and what kind of information is being given by financial managers to investors, especially concerning the sale of instruments linked to Bitcoin.

When contacted by ECO, CMVM refrained from commenting.

80% of investments result in total losses

CMVM is dealing with the issue and has recently warned investors against the operations called Initial Coin Offerings (ICO), a kind of “shares’ takeover bid” performed online using a cryptocurrency. In these ICO, investors purchase a new digital coin issued by the company, to which they pay either in euros or dollars.

An ESMA European study showed that 80% of investments made in complex products with a high level of leveraging presented a total loss for investors. That is the case of products such as Bitcoin binary options and CFDs (contracts for difference), which are being monitored by CMVM.