Stay Away; FCA warns consumers of crypto investment risks
January 12, 2021 8:12 AM
The UK's Financial Conduct Authority (FCA) posted a statement on Monday telling-off investors about the risk that awaits them in venturing into Cryptocurrency products offering high returns, hinting that they should be prepared to lose "all their money."
Earlier today the FCA said;
"Consumers should be wary if they're contacted out of the blue, pressured to invest quickly or promised returns that sounds too good to be true".
The FCA also added, that consumers for crypto asset-related investments are unlikely to have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme if something goes wrong.
The FCA also stressed the need for proper and detailed understanding of the risk associated with any crypto asset prior to making an investment on them. Highlighting a number of factors such as, consumers protection, price volatility, product complexity, as well as reliability issues which places investors on a high risk terrain.
On Jan. 6, the FCA's ban on the sale of cryptocurrency derivatives and exchange-traded notes – brought in as a consumer protection – went into effect.
This would ensure that all United Kingdom-based crypto asset firms complies with all relevant regulatory requirements and must be authorized by the watchdog.