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CRYPTOASSETS INFORMATION AND RISKS

High-risk investment product

  1. The value of the investments and the return obtained thereon may experience significant upward and downward fluctuations, and the entire amount invested may be lost.
  2. Investments in early-stage projects involve a high level of risk, so it is necessary to properly understand their business model.
  3. Cryptoassets within the scope of this Circular are not covered by customer protection mechanisms such as the Deposit Guarantee Fund or the Investor Guarantee Fund.
  4. Cryptoasset prices are formed in the absence of mechanisms that ensure their correct formation, such as those present in the regulated securities markets.
  5. Many cryptoassets may lack the liquidity needed to unwind an investment without significant losses, as their circulation among both retail and professional investors can be very limited.

Risks inherent to technology

  1. Distributed log technologies are still at an early stage of maturity, with many of these networks having been created only recently, so they may not be sufficiently tested and there may be significant flaws in their operation and security.
  2. The recording of transactions in networks based on distributed registry technologies works through consensus protocols that may be susceptible to attacks that attempt to modify this record and, if these attacks are successful, there would be no alternative record to support these transactions and therefore the balances corresponding to the public keys, and all the cryptoassets could be lost.
  3. The anonymity facilities that cryptoassets can provide make them a target for cybercriminals, since in the case of stealing credentials or private keys they can transfer the cryptoassets to addresses that make them difficult or impossible to recover.
  4. The custody of cryptoassets is a very important responsibility since they can be lost in their entirety in the event of theft or loss of the private keys. The entity performing the custody of the advertised cryptoassets, the country in which it performs the custody and the applicable legal framework shall be identified.

Legal risks

  1. The acceptance of cryptoassets as a medium of exchange is still very limited and there is no legal obligation to accept them.
  2. When the service provider is not located in a European Union country, the resolution of any dispute could be costly and fall outside the scope of the Spanish authorities’ jurisdiction.
  3. When the investor does not have the cryptoassets, being in digital wallets (“wallets”) of the service provider, and without access to the private keys thereof, this situation shall be indicated and the investor’s rights over these cryptoassets shall be described.