Be prepared to lose all your money, FCA warns crypto investors
UK regulator speaks out as bitcoin plunges 28% in three days from record high of $42,000
Crypto investors “should be prepared to lose all their money” if they continue to plough funds in the volatile digital currency, according to the UK Financial Conduct Authority (FCA).
The warning comes after the value of bitcoin fell from its record high on 8 January of $42,000 to $30,200 on 11 January. The cryptocurrency has since recovered to reach $35,345 on 12 January.
The FCA detailed several key risks associated with investing in cryptocurrencies in an attempt to dispel some of the myth and glory behind the often-misunderstood segment.
The FCA said investors were unlikely to have access to consumer protection schemes such as the Financial Ombudsman Service or the Financial Services Compensation Scheme if something were to go wrong.
The authority also pointed to the obvious price volatility, along with the product complexity behind crypto as reasons to avoid investing.
Finally, the FCA stated investors should be wary of unexpected charges and fees, as well as overstated marketing materials.
From 10 January, all UK cryptocurrency firms must be registered with the FCA under new regulations to tackle money laundering.
The FCA said: “The FCA is aware that some firms are offering investments in cryptoassets, or lending or investments linked to cryptoassets, that promise high returns.
“Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. If consumers invest in these types of product, they should be prepared to lose all their money,” it added.