Latvian financial regulator warns of crypto fraud
The FCMC claimed that the high occurrence of fraud made cryptocurrency a risky investment for citizens
The Finance and Capital Markets Commission (FCMC) of Latvia has issued a warning, reminding its citizens of the risk of cryptocurrency fraud targeting users across various channels.
The statement made by the commission detailed how fraudsters create their crypto money investment ads by taking the names and likeness of several high-profile people and companies on the internet. It goes on to say that these advertisements are mostly used as tools to commit fraud, and offers high interest rates for short-term investments in a bid to attract users.
“Fraudsters are increasingly looking for new ways to mislead consumers. One such way is to pretend to be licensed financial market participants. Such fraudsters may contact you unsolicited via email, social media platforms, or the consumer may receive calls after searching for online investment opportunities and providing their contact information online,” the FCMC warned.
Other fraudsters go as far as to advertise nonexistent cryptographic assets in an attempt to lure investors into their scheme.
The FCMC advised citizens to conduct thorough research before investing into any of the cryptocurrency platforms.
“The FCMC supervises only licensed market participants who have received a relevant license for attracting financial services, including investments. Only in transactions with such investment takers is the client protected by the state.”
While the European Union has been working on developing various regulations regarding the effectiveness of cryptocurrencies, the government of Latvia currently does not have any regulations against the circulation of cryptocurrencies. The FCMC clarified that the issuance and circulation of digital currencies is not regulated in Latvia; however, some crypto investment instruments, such as contracts for differences (CFDs), are regulated in the country.
“In the interests of investor protection, the FCMC warns against such possible fraud schemes and urges investors to be vigilant, as cryptocurrencies operate in an infrastructure that is currently characterized by lower regulation than in the financial and capital markets,” the FCMC concluded.
It remains to be seen whether this statement by the FCMC will be a catalyst for the Latvian government to take an official step towards defining the scope and limitations of the cryptocurrency industry within the country.
In 2018, the Latvian Finance Ministry announced that cryptocurrencies would be taxed under “income from capital gains” at 20 percent.