No Protection or Compensation for People Whose “Digital Wallets” Are Hacked says EBA

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No Protection or Compensation for People Whose “Digital Wallets” Are Hacked says EBA
No Protection or Compensation for People Whose “Digital Wallets” Are Hacked says EBA

No Protection or Compensation for People Whose “Digital Wallets” Are Hacked says EBA

In a statement the European Banking Authority (EBA) says that there is no protection or compensation for people whose “digital wallets” are hacked. This generally happens when customers transfer virtual money to the wrong address or when the platform is shut. The statement has disappointed those who were thinking for a better opinion.

Now, Bitcoiners are on their own when it comes to losses in any compromised ‘digital wallet’ as the European Union’s banking watchdog is not willing to interfere and secure the losers. The organization gave a formal warning to consumers on the risks of using unregulated online currencies.

A Major Blow to Bitcoin

Earlier China announced that Bitcoin cannot be part of financial transactions; it reduced the clout of the digital currency as its uses have been reduced to a great extent. What is the use of a currency if it cannot be used for financial transactions; however, Chinese government’s concerns cannot be set aside as there can be a lot of trouble if the issues related to Bitcoin transactions appears up and unsettle its economy.

The EBA’s warning is a clear indication of the fact that the banking body is not actually trying to protect Bitcoiners who lose their money due to loophole in the procedure of Bitcoin transactions. The statement from the banking body will discourage the users as they will feel apprehensive about transactions as they cannot get the problem addressed as they have been warned already.

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According to market observers from the statement from the EBA it is clear that now Bitcoiners are at their own when it comes to using online currency and if they end up out of pocket there won’t be a safety net like the compensation given to deposit holders when a mainstream EU bank goes bust.

No Protection for Virtual Currency Users

In its statement the EBA said, “Currently, no specific regulatory protections exist in the EU that would protect consumers from financial losses if a platform that exchanges or holds virtual currencies fails or goes out of business. Cases have been reported of consumers losing significant amounts of virtual currency, with little prospect of having it returned.”

The decision came after a lot of study that the EBA on the nature and behavior of the virtual currency. It concluded that when using virtual currency for commercial transactions, consumers are not protected by any refund rights under EU law.

To contact the reporter of this story: Deepak Tiwari at deepak@forexminute.com