The Financial Conduct Authority which is the UK’s financial regulator has warned investors about putting their money in crypto. The Financial Conduct Authority (FCA) issued the warning amid a crypto crash that saw a 30% drawdown in the BTC price.
Crypto a high risk investment
In a Monday January 11, 2021 statement, the FCA said that crypto investment and even lending involved high risk. The FCA went on to make what some might consider an alarming statement by saying that crypto investors should be ready to lose all their money if they are to stay in the markets.
The financial regulator cited a number of risks that investors should look out for, these included; product complexity, high charges and fees and most of all price volatility. According to the FCA investors and would be investors better be ready to take all the associated risks.
“Consumers should be aware of the risks and fully consider whether investing in high-return investments based on crypto assets is appropriate for them.”
No legal remedy for crypto investors
The regulator also brought up the fact that investors had little to no legal remedy should something go wrong. Consumer protection institutions like the Financial Ombudsman Service or the Financial Services Compensation Scheme were unlikely to give distressed investors any redress. The FCA here implies that investors are on their own if they choose to get into the crypto markets.
The regulatory body also had words for crypto-related services. The FCA stated that all crypto companies have to comply with all relevant regulatory requirements authorized by it. All crypto firms as from yesterday are required to register with the FCA in compliance with regulations set to curb money laundering. According to the regulator ““Operating without a registration is a criminal offence,”
The FCA’s warning comes amid a crazy price sell off that saw BTC move from the $42,000 mark on January 8 to just under $33,000 on January 11. A rebound has since happened and the time of writing, BTC is trading at $35,000. Though some may see this as the time to cash out but with stimulus checks coming with the Biden administration, there is going to be more printing of money. More money printing simply means more inflation and a stronger leaning towards assets like BTC and Gold.
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