The Financial Conduct Authority, the UK financial services regulator, has issued a stern warning about the “very high risks” faced by consumers who choose to invest in cryptocurrency.
The warning comes as bitcoin fell from all-time highs of more than $40,000 to less than $33,000 overnight.
“If consumers invest in these types of product, they should be prepared to lose all their money,” said the FCA in a statement on January 11, 2021.
The watchdog advised consumers to be wary about being contacted out of the blue by scam artists offering returns that sound too good to be true.
The statement also included a reminder that cryptoasset businesses in the UK, as of January 10, must be registered with the FCA as part of rules designed to tackle money laundering. The regulator recently unveiled a temporary register which includes some 90 crypto firms, providing a pathway for those businesses to continue operating while awaiting full authorisation.
The FCA also laid out some of the key risks to investing in crypto, including a lack of consumer protection, volatility, product complexity, a lack of transparency around fees, and misleading marketing which may overstate potential returns.