UK city watchdog the Financial Conduct Authority (FCA) has issued a stern warning to consumers that they risk losing all their money held either in crypto-assets or crypto-related investments. crypto-assets.
During the past year, crypto-assets have continued to capture the imagination of the investing public as investors seek new homes for their money away from traditional havens such as conventional stock markets.
The FCA said it is aware of companies offering crypto-asset-linked investments that promise high returns and urged caution. “Investing in crypto-assets usually involves taking very high risks with investors’ money. If consumers invest in these types of products, they must be prepared to lose all their money,” he warned.
The FCA added that it has multiple concerns regarding high-yield investments based on crypto-assets. These include consumer protection, price volatility, product complexity, fees, as well as how these products are promoted.
Cryptocurrencies are notoriously volatile. The main cryptocurrency, Bitcoin, has seen its price drop by around a fifth in recent days, from over $40,000 to around $35,000. This follows the stellar returns it has enjoyed in 2020. Last March, its price was hovering around the $5,000 mark.
New rules have recently come into force requiring cryptocurrency businesses to comply with anti-money laundering rules. All UK crypto-asset companies must be registered with the FCA. Exploitation without registration is a criminal offence.
“Consumers should beware if they are approached out of the blue, pressured to invest, or promised returns that sound too good to be true,” the FCA said.