Regulation and Risk: Crypto Investors' Misconceptions

The Traders Union conducted research to determine how regulation affects crypto investors' perception of safety. The study found that 72% of respondents feel safer when using a regulated platform, with 31% saying they feel much safer.

However, the research also revealed that investors often misunderstand what 'regulated' means. Only 33% primarily associate it with compliance with regulatory standards and oversight. Another 21% believe that regulated status means customer funds are protected, while 14% view it as a sign of financial stability.

The study showed that investor expectations often go beyond the protections provided by regulation. For example, 14% expect protection if a provider becomes insolvent, 12% expect compensation for lost funds, and 10% expect protection against hacks and cyberattacks.

The Traders Union notes that regulated status alone does not guarantee compensation for all losses and does not protect investors from falling cryptocurrency prices, problems at the provider itself, or cyberattacks. European regulators have also noted that protections for cryptoasset users may be more limited than those available for traditional financial products.