Cryptocurrencies: regulator’s warning

Share This Post

Yesterday, 11th January, the Financial Conduct Authority (the UK’s financial regulator) issued a warning to consumers about the risks of investments which promise high returns based on underlying crypto assets.

The warning used very uncomplicated language: “Investing in crypto-assets, 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.” 

The full press-release of the warning is available here: https://www.fca.org.uk/news/news-stories/fca-warns-consumers-risks-investments-advertising-high-returns-based-cryptoassets

The most common cryptocurrency is Bitcoin which over recent months has enjoyed a spectacular price surge. However, by coincidence, the same day the regulator issued it’s ‘be prepared to lose it all’ warning, the volatile nature of crypto assets was highlighted again as Bitcoin dropped 28% during the day.

At Investment & Retirement Solutions Ltd we’ve become a little concerned about the FOMO effect – the Fear Of Missing Out, which could be encouraging retail investors to take inappropriate action, the consequences of which they don’t understand.

We reiterate the Financial Conduct Authority’s warning that purchasing cryptocurrency exposes an individual to the risk of a total loss and we would remind cryptocurrency purchasers that if they find themselves out of pocket they would be unlikely to be able to rely on the Financial Ombudsman Service to settle complaints or to order compensation from offending firms. Consumers are also unlikely to be covered under the Financial Services Compensation Scheme, which covers losses up to £85,000 on fully regulated accounts and investment products including pensions.

We’ll ask for some feedback when we speak with clients and if there is the demand, we’ll publish an educational article which discusses how cryptocurrencies work.

More To Explore:

Service

Pressing Pause

This will be our last post on this website and on social media for a while.  Time is our most precious commodity and COVID and

COVID

Pingdemic?

Unfortunately the Investment & Retirement Solutions Ltd ‘great unlocking’ has had some unintended consequences as 30% of our independent financial advisers and 50% of our

Notices:

Our posts are intended as financial education and financial information, not as financial advice, and are only suitable for UK residents. Always take professional, independent advice before acting on any information.

Investment & Retirement Solutions Ltd is authorised & regulated by the Financial Conduct Authority.

The value of investments and income from them can fluctuate (this may partially be the result of exchange rate fluctuations) and investors may get back less than the amount invested. Past performance is not a guide to future performance.

Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.

The Financial Conduct Authority does not regulate taxation and trust advice, will writing, advice on deposit accounts, some types of offshore investment, some aspects of buy to let mortgages, commercial finance or offshore mortgages.

Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor. Unless specifically stated otherwise, our posts do not allow for the additional taxation powers which may be levied by the devolved governments.

All information is offered in good faith and is believed to be correct at the time of publication however it may be superseded following publication. E. & O. E.

Would you like to know more?

drop us a line, it's good to talk

Skip to content