UK FCA warns investors against crypto-related investment risks and scams
UK regulator, Financial Conduct Authority (FCA) advised investors to be aware of certain, unnamed firms that offer investments in crypto assets that “promise high returns.” According to FCA, investing in cryptocurrencies, or “investments and lending” connected to the assets “involves taking very high risks with investors’ money.” On 11 January, the regulator stated:
If consumers invest in these types of products [such as crypto assets], they should be prepared to lose all their money.
The financial regulatory body specifically said that in the event of a mishap with crypto-related investments, users “are unlikely to have access to the Financial Ombudsman Service (FOS) or other compensation schemes in the UK.
The regulatory body also cited its Guidance on Crypto Assets for consumers to find out more about which crypto activities FCA regulates.
It further mentioned that users must protect themselves from fraud as well as schemes that “pressured” consumers “to invest quickly” or promised returns to them “that sound too good to be true.”
From 10 January 2021 onward, FCA requires all UK crypto assets-related entities to register with them, which according to the regulator would help them tackle money laundering.
The regulator also mentioned the risks that consumers could face, which include price volatility and product complexity among others.
Moreover, the warning from FCA comes amid Bitcoin’s recent volatility which saw prices soar to values over $40K. However, a wave of corrections brought prices down to $33,408, at press time.
Nevertheless, Bitcoin’s performance has divided the crypto sector into those who call the digital asset a massive bubble and warn investors of volatility, and others who think market conditions would eventually favor Bitcoin before it reaches a million-dollar ATH.
