The Cyprus Securities and Exchange Commission (CySEC) on Thursday highlighted that the rapid evolution of technology has transformed the financial sector, reshaping how investors and consumers manage their money.

Specifically, Elena Karkoti, a senior officer at CySEC responsible for financial literacy initiatives, explained that “while the digital financial environment offers new opportunities, it also presents significant risks that require awareness and vigilance”.

“The modern financial environment demands knowledge, critical thinking, and continuous awareness,” Karkoti stated.

As part of its investor education strategy, CySEC designs and implements various initiatives to inform and protect investors from risks and pitfalls in the digital financial landscape.

“CySEC does not limit its role to regulation and oversight but actively engages in financial education, ensuring that investors have the tools to make informed decisions,” she added.

This year, CySEC is once again participating in Global Money Week, an international campaign organised by the OECD from March 17-23, 2025.

“The focus of this year’s campaign is on the risks associated with the digital financial environment, highlighting critical issues such as protection against online fraud, the influence of financial influencers on social media, and the risks of misleading investment practices,” Karkoti explained.

The CySEC official also mentioned that the rise of digital finance has introduced a broad range of services, including online banking, investment platforms, and fintech innovations such as blockchain and artificial intelligence.

“The digital transformation of investments has made market access easier, allowing investors to make real-time decisions and place funds in international markets without geographical limitations,” she said.

However, she warned that these technological advancements also pose threats. “Investors can be exposed to fraudulent platforms, misinformation, misleading investment advice, and non-transparent practices,” Karkoti added.

Cybersecurity threats are also a growing concern, with hacking and phishing attacks targeting digital transactions.

Additionally, a lack of regulatory oversight in some cases creates opportunities for unethical practices.

“To protect themselves from online traps and fraud, investors must be able to recognise warning signs,” Karkoti stressed.

“Promises of exceptionally high returns with no risk usually indicate Ponzi or pyramid schemes,” she added.

Moreover, Karkoti cautioned that fraudulent investment platforms “often appear legitimate but operate without proper licensing“.

A particular area of concern is the role of financial influencers, or ‘finfluencers,’ on social media. “Excessive promotion of investment opportunities by social media influencers relies on communication strategies rather than reliable financial data,” Karkoti warned.

“A lack of transparency, difficulty in understanding a company’s business model, and the inability to verify investment information should also be seen as red flags,” she stated.

To enhance investor protection, CySEC works closely with European regulatory authorities to implement strict supervisory measures.

“The European MiCA regulation establishes a unified regulatory framework for cryptocurrencies and digital finance services, ensuring stricter oversight,” she explained.

In addition, anti-money laundering regulations help prevent non-compliance in financial markets and reinforce transparency.

“Regular inspections of investment platforms and close collaboration with international regulators contribute to reducing fraud and strengthening trust in the financial system,” she said.

Karkoti also pointed out that education remains a fundamental pillar of CySEC’s investor protection efforts.

“Financial education and public awareness programmes are crucial in promoting financial literacy and protecting investors,” Karkoti stressed.

In this context, she urged investors to be proactive in verifying information, checking the legitimacy of investment platforms, and avoiding financial opportunities that seem too good to be true.

“The digital financial environment offers many opportunities, but safe investing requires the right knowledge and caution,” she concluded.