The European Securities and Markets Authority (ESMA) on Friday warned investors about the “halo effect,” cautioning that licensed crypto providers offering both regulated and unregulated services may cause investors to overlook potential risks.
ESMA also urged CASPs to prevent client confusion and be clear about the lack of protections tied to unregulated products and services.
“Some CASPs may even use their regulated status under MiCA as a marketing argument and encourage confusion between regulated and unregulated products and services,” ESMA said.
ESMA also warned crypto-asset firms of their duty to act fairly, professionally, and in their clients’ best interests, ensuring all information—including marketing—is clear, fair, and not misleading.
The warning represents the latest effort by European authorities to address risks associated with cryptocurrency investments and services.
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