In the official warning the authority notes that cryptocurrencies are not backed by any central bank, and warns against the volatility of virtual currencies, stressing that deals are often not entirely transparent and business models are incomprehensible. It warned of the absence of consumer protection and the risk of theft, since cryptocurrency exchanges may be vulnerable to hackers. Furthermore, according to the regulator, information about cryptocurrencies is “often incomplete, difficult to understand or does not reflect the risks of cryptocurrencies”.
The CSSF specifically hones in on their perceived risks of investing in ICOs. According to the authority, the ICO model is unproven and lacks verifiable information about the tokens and the money collected.
The Luxembourg regulator also made a point of saying that it was not concerned about Blockchain technology in use cases apart from cryptocurrencies, noting that Blockchain “could bring certain advantages in their use in the financial sector and in different innovative projects.”
In addition to the CSSF, other European government regulators have also expressed skepticism about cryptocurrencies and ICOs recently. In Fall 2017, the German Federal Financial Supervisory Authority (BaFin) indicated that the purchase of coins or tokens sold in ICOs entails significant risks for investors and described ICOs as "highly speculative investments". In November 2017, the European Securities and Markets Authority (ESMA) also warned investors about the high risks of the ICOs.