On Monday, the Financial Watchdog of the United Kingdom, the Financial Conduct Authority [FCA], published an alert to customers about the investment risk of cryptocurrencies.
According to the statement, the key focus of the alert was on crypto-assets and high-return firms. The warning included the FCA saying that customers should be prepared to “lose all of their money.”
Pursuant to the notice:
“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. “
Cryptocurrencies have been the mainstay of conventional financial regulators, but the risk message even inside the crypto community has been evident.
For example, Bitcoin‘s biggest blockchain drew everyone’s interest from the mainstream to the crypto community as it hit new price peaks every day. However, on Sunday, BTC’s worth fell from $41k to as low as $32k. This massive drop has not been seen in the BTC market for a long time. This unpredictable aspect of the crypto industry has been consistently demonstrated.
The FCA then cautioned that any challenges encountered by crypto investors within the country could not be evaluated by the Financial Ombudsman Service, which settles disputes between customers and firms offering financial services.
Apart from customer security and price uncertainty, it outlined other risks associated with ‘high-return investing focused on crypto assets’ such as product sophistication, charges and fees and marketing materials. It added the following:
“Consumers should be aware of the risks and fully consider whether investing in high-return investments based on cryptoassets is appropriate for them. They should check and carefully consider the cryptoasset business involved.”
Previously, the regulatory body noted that all crypto businesses operating in the country will have to be registered with the FCA in order to comply with the regulations. This was reported to be achieved by 10 January 2021 and the action without registration would be unlawful and would be considered a criminal offence.
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