The Financial Conduct Authority has warned investors that they should be prepared to lose all their money if they take on speculative punts in cryptocurrency markets.
The warning from the watchdog comes amid a wildly volative ride for cryptocurrencies, with the price of a single bitcoin crashing to below $33,000 after hitting the dizzying heights of $48,000 just days previousloy.
The regulator says: "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."
For cryptoasset-related investments, consumers are unlikely to have access to the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS) if something goes wrong.
The FCA says sonsumers should be wary if they’re contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true.
Since 10 January 2021, all UK cryptoasset firms must be registered with the FCA under regulations to tackle money laundering. Operating without a registration is a criminal offence.
Nonetheless, some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements, states the Uk regulator.