The Financial Conduct Authority, the financial regulator of the United Kingdom, has issued an alert in the middle of a significant crash on crypto exchanges concerning cryptocurrency investing.
In a January 11 report, the FCA said that a high level of risk is associated with crypto investment and lending, stressing that investors should be prepared to lose all their money when investing in cryptocurrency.
Citing a range of threats, including price volatility, product complexity, fees and costs, the FCA said that crypto-associated risks are taken over by investors: “Consumers should be aware of the risks and fully consider whether investing in high-return investments based on cryptoassets is appropriate for them. They should check and carefully consider the cryptoasset business involved.”
The regulator has claimed that if anything goes wrong, crypto investors are unlikely to have access to large customer protection institutions such as the Financial Ombudsman Service or the Compensation Scheme of Financial Services.
The FCA noted that businesses providing crypto-related services should ensure that they comply and are approved by the FCA to comply with all relevant regulatory requirements. The agency wrote that from January10, 2021, all UK-based crypto asset companies must be registered with the FCA under regulations to tackle money laundering. “Operating without a registration is a criminal offence,” the FCA added.
