Consumer protection in cryptocurrency transactions is an essential aspect of regulatory evolution, following the discussions on the definition, legal framework, oversight bodies, and licensing mechanisms in previous articles in the series.

The complexities and risks associated with digital assets necessitate a comprehensive consumer protection regime to mitigate potential losses and enhance trust in the financial ecosystem.

The various risks pose significant challenges for consumers engaging in cryptocurrency transactions.

Pakistan’s roadmap to crypto legalization–II

The market volatility can lead to extreme price movements, often resulting in substantial financial losses. The instances of misleading information, lack of protection, product complexity, and low liquidity exacerbate these risks.

The fraudulent activities, including hacking and market manipulation, further undermine consumer confidence. Additionally, cyber threats such as malware, phishing scams, and rug pulls have demonstrated the vulnerabilities inherent in digital asset platforms.

The different types of crypto fraud have emerged globally, affecting unsuspecting investors. The Ponzi and pyramid schemes promise high returns but rely on new investments to sustain payouts, eventually collapsing and causing significant financial losses. The phishing scams exploit social engineering techniques to obtain private keys, enabling fraudsters to access and drain digital wallets.

The rug pulls occur when developers abandon projects after raising capital, leaving investors with worthless assets. The fake Initial Coin Offerings (ICOs) have been widely reported, where fraudulent entities solicit funds for non-existent projects. The impersonation scams leverage the identities of celebrities or........

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