What the risks of crypto-assets are

Key points

• The price of crypto-assets can fall a lot, and very fast. You can lose everything you invest.
• No guarantee scheme covers them, unlike the one that covers bank deposits.
• EU law requires authorized providers to follow rules on custody, information and complaints, but it does not protect you from price falls.
• Many risks also depend on you: how you keep your keys and passwords, and whether you spot a scam.

The price can change a lot

Most crypto-assets do not entitle you to profits or interest. Their price depends on what others are willing to pay at any moment, and it can change a lot within hours. That volatility works both ways.

An example: according to the European Central Bank, the value of bitcoin peaked at 69,000 dollars in November 2021. By mid-June 2022 it had fallen to 17,000. It is not an isolated case: crypto-assets have gone through sharp falls several times.

Deciding in a hurry is another risk. The CNMV, the Spanish securities regulator, warns that persuasive design plays on emotions. For example, the fear of missing out, euphoria when prices rise or panic when they fall. And that pushes people into rash decisions.

You may not be able to sell when you want

Liquidity is how easily something can be sold without moving its price much. For crypto-assets with little volume, or in moments of panic, you may not find anyone to sell to. Or only at a much worse price.

A market order fills against whatever orders are there at that moment, even at a worse price than you expected.

Stablecoins move too

A stablecoin tries to keep the same value as an official currency, such as the euro or the dollar. It does not always manage to. According to the European supervisory authorities, stablecoins may not be so stable over time, especially when markets are under stress.

In the European Union, their issuers need an authorization and must hold assets that back them. Even so, their value can drift away from that of the reference currency.

Scams and attacks

Crypto-assets attract many fraudsters, because transfers are fast and cannot be cancelled. The most common warning signs are:

• promises of large, certain or quick gains;
• pressure to decide fast, or gifts if you join today;
• celebrities or so-called experts recommending an investment on social media or in messaging groups;
• someone offering to recover the money you lost, in exchange for an upfront payment.

Platforms get attacked too. In February 2025, a trading platform suffered the theft of about 1.5 billion dollars in crypto-assets. The FBI attributed it to North Korea.

And a mistake of your own, such as sending to the wrong address or network, usually cannot be fixed. We explain it in What a crypto wallet is.

What the law protects and what it does not

The EU Markets in Crypto-Assets Regulation (MiCA) regulates crypto-asset service providers. It requires authorized ones, among other things, to:

• give fair, clear and not misleading information, also in their marketing;
• warn about the risks of their services;
• keep their clients' crypto-assets separate from their own;
• be liable for their loss if it is caused by an incident attributable to them;
• have a procedure to handle complaints.

As ESMA, the European Securities and Markets Authority, puts it, "the new regulation (MiCA) does not eliminate all risks":

• It does not protect you from price falls.
• There is no "safety net" if a provider cannot return your crypto-assets. They are not covered by deposit guarantee or investor compensation schemes.
• It does not require every provider to check whether you understand what you buy.

Other things worth knowing

• Taxes. Selling crypto-assets, or swapping one for another, can produce a gain or a loss that has to be declared. In Spain, it goes in the income tax return, as the Spanish Tax Agency explains.
• Your account and your keys. If someone gets into your account, or you lose access to your own wallet, you can lose the funds. We explain it in How to protect your account.
• Complex products. Some crypto products are hard to understand, such as those that promise returns or let you trade with borrowed money. Take the time to understand how they work before you use them.

Before you take a step

Before buying crypto-assets, ESMA suggests checking, among other things, whether:

• you can afford to lose all the money you invest;
• you are ready to take high risks;
• you understand how the crypto-asset and the service you will use work;
• you can properly protect your devices and your keys;
• the providers you deal with are authorized to provide those services in the European Union.

Sources

• "Crypto-assets on the rise but remaining very risky", ESMA warning of 18 December 2024.
• EU supervisory authorities' warning on the risks of crypto-assets (6 October 2025) and their factsheet "Crypto-assets explained".
• Regulation (EU) 2023/1114 on markets in crypto-assets (MiCA), Articles 66, 71 and 75.
• "Bitcoin’s last stand", European Central Bank blog, 30 November 2022.
• "North Korea Responsible for $1.5 Billion Bybit Hack", FBI public service announcement, February 2025.
• "Persuasión digital para inversores", CNMV guide (in Spanish).
• "Compra y venta de monedas virtuales: tributación en el IRPF del inversor", Spanish Tax Agency (in Spanish).