NBP and KNF warn against "virtual" currencies

The National Bank of Poland and the Polish Financial Supervision Authority issued yesterday a document warning potential users against the risks associated with "virtual currencies" (such as Bitcoin, Ethereum, Litecoin). The very fast growing popularity of these instruments is a threat, especially for novice traders who may not be aware of the risk involved in investing in cryptocurrencies.

The document also informs that the trade in virtual "currencies" is fully legal in Poland and the entire European Union (in some countries, such as Germany, it has even been recognized as a means of payment - editor's note). However, on the other hand, the NBP and the PFSA mention a number of risks related to the possession and trading of these "instruments":

• The possibility of theft due to a cyber attack,
• Risk related to the lack of a guarantee (cryptocurrencies are not covered by the Bank Guarantee Fund or other form of security),
• The risk related to the lack of universal acceptability,
• The risk associated with the possibility of fraud (unconscious participation in the financial pyramid),
• Risks with high amplitude of exchange rate fluctuations.

Warnings are not addressed only to retailers. The message fragment also refers to financial institutions.

The document says:

The National Bank of Poland and the Polish Financial Supervision Authority also indicate that financial institutions should exercise particular caution in undertaking and conducting cooperation with entities trading in "virtual" currencies, in particular with regard to the risk of using these entities for money laundering and financing of terrorism. The decision in this respect should be preceded by a thorough analysis of potential consequences, including legal risk and reputation risk.