Crypto-assets: Precautions you should take

Crypto-assets, often referred to as ‘cryptocurrencies’, are digital tokens that exist only in the virtual world. Examples include Bitcoin and Ethereum. They can be used for speculative investment or to make purchases on certain websites or with specific merchants. However, these tokens do not meet the criteria for legal tender, such as the euro or F CPF. Real currencies are universal units of account, accepted by all merchants as their value is guaranteed by a central authority. In France, the euro is the only legal tender. By contrast, the value of crypto-assets such as Bitcoin fluctuates constantly, is not backed by any institution, and no one is legally required to accept them as a means of payment.

Crypto-assets are based on blockchain technology, which ensures the security and transparency of transactions. Blockchain is a method of storing and transmitting information through a network of computers. It records all transactions in a decentralised, secure and transparent manner.

In practical terms, a blockchain functions like a large ledger shared across multiple computers. Each transaction is encrypted and added to a block of data, which is then linked to the previous block – forming a chain. This chain is visible to all users and provides a complete and secure history of all transactions made since its creation.

Before investing in crypto-assets, it is important to familiarise yourself with the associated risks Here are some important guidelines to bear in mind:

– Understand how crypto-assets work : Before making any investment, make sure you fully understand how crypto-assets operate – including blockchain technology, mining, and digital wallets. A solid understanding will help you better assess the potential risks.
– Volatility : The prices of crypto-assets can fluctuate significantly in a very short time. This high volatility makes investing in crypto-assets particularly risky, especially for beginners.
– Lack of guarantees : Crypto-assets are not covered by deposit guarantee schemes. As a holder of crypto-assets, you do not have the same protections or legal recourse as with traditional bank transactions in fiat currency, especially in cases of fraud.
– Risk of total loss: : You may lose your entire investment due to price volatility, cyberattacks, or the loss of access keys to your digital wallets.
– Technical precautions : Ensure your crypto-assets are securely stored. Use trusted wallets, favour offline (cold) storage solutions for large amounts, and stay alert to scams and phishing attempts.
– Do your own research : Don’t rely solely on so-called experts or trending opinions. Take the time to thoroughly research each project before investing.
– Diversify your investments : As with any investment, avoid putting all your money in one place. Diversification can help reduce overall risk.

Investing in crypto-assets involves significant risks. To protect yourself, follow these guidelines:
– Check authorisations : Make sure the intermediary offering products or services related to digital assets is authorised to do so the list of Digital Asset Service Providers (DASPs)registered or licensed by the French financial market authority (AMF — Autorité des Marchés Financiers). Only service providers established in France are authorised to operate in the French Pacific territories. They can be identified by a French Trade and Companies Register (RCS) number (see the fifth column of the table).
– Avoid unsolicited offers from unregistered entities: : Do not respond to solicitations from companies that do not appear on the official list. These entities are operating illegally and do not comply with investor protection regulations, proper information disclosure, or complaint-handling procedures. Report such solicitations to IEDOM and/or the AMF.
– Consult warning lists : lThe AMF publishes blacklists of websites involved in crypto-asset scams, including offers to purchase fictitious crypto-assets or invest in fraudulent projects. You can find these blacklists on the AMF’s official website.
– Follow practical advice : Read the AMF’s practical tips and the educational materials provided by the Banque de France to understand the precautions you should take before investing.