uks crypto investment

UK’s FCA says crypto investors they could ‘lose everything’

The Financial Conduct Authority, United Kingdom’s financial watchdog, said that people who are planning to invest in Bitcoin and other cryptocurrencies should be prepared to lose everything if ever the value of digital assets collapse. According to the FCA, digital currencies are not protected by regulations, which can pose a risk for investors and users in the long run.

Bitcoin’s value rose to US$40,000 last year. This hike in value caught a lot of attention of small and big-time investors. However, the FCA warned that investing in digital assets can generate high losses because they are not tethered to recognized assets in the market.

According to FCA, digital assets do not have access to the Financial Services Compensation Scheme or the Financial Ombudsman Service.

‘Investing in crypto assets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. If consumers invest in these types of products, they should be prepared to lose all their money.

As with all high-risk, speculative investments, consumers should make sure they understand what they’re investing in, the risks associated with investing, and any regulatory protections that apply, said the FCA in a statement.

Susanah Streeter, a senior investment and market analyst at Hargreaves Lansdown also mirrors the FCA’s concern, saying that crypto’s volatile nature is concerning.

‘Bitcoin’s rapid ascent and descent in just a few days underlines just how volatile the cryptocurrency is. It lost as much as 20% of its value over the last 24 hours, before regaining ground slightly, amid reminders from the UK’s financial watchdog about the risks of investing in firms offering investments in crypto assets which promise high returns,’ stated Streeter.

‘There is much speculation that Bitcoin will become more mainstream, especially with more institutional investors becoming involved, but the future of cryptocurrencies remains highly uncertain. Bitcoin’s price is being driven primarily by future price speculation rather than an underlying use-case.’

Meanwhile, Laith Khalad, a financial analyst in AJ Bell said that investors should be careful and alert in tracking the movements of the market in order to avoid huge losses.

‘Unfortunately, Bitcoin and other crypto assets are subject to dramatic price falls as well as rises. Consumers should be on high alert for unsolicited communications linked to Bitcoin or other cryptocurrencies and should consider any marketing material with an extremely critical eye.’

Leave a Comment

Please enter CoinGecko Free Api Key to get this plugin works.