FCA reminds crypto investors of risks associated with investment
2 min readTL;DR Breakdown
- FCA warns crypto investors of risk on investments
- Regulators highlights five concerns bordering them
The UK Financial Conduct Authority (FCA) has sounded a note of warning to crypto investors on their investment risks. The FCA class risks related to the investment as ‘very high.
Preparing crypto investors’ minds for worse, FCA warned that before investors stake in business like this, they must be ready to forget about their entire investments amidst profits investment firms promised investors.
The FCA hammered on crypto investors that investments are highly volatile and in most cases are not insured by regulators like the Financial Service Compensation Scheme.
Risks regulators warn crypto investors against
The UK regulators categorically highlighted five concerns bordering them as regards high-return crypto investments.
The regulators listed consumer protection stating that several firms advertising returns on crypto assets are not regulated beyond anti-money laundering policies.
The regulators highlighted price volatility as another factor investors should be afraid of, noting that volatile prices and difficulties in valuing crypto assets reliably put the consumer in a position of losing investments.
Product complexity, charge fees, and Marketing materials are other risks the regulators asked investors to be wary of.
Product complexities and crypto asset services can make it difficult for consumers to understand the risks the regulators warned.
Towards reducing crypto investment risks, in October 2019, the FCA placed a ban on the sale of crypto derivatives and exchange-traded notes (ETNs) to retail investors and would enforce the regulation began last week.
The embargo affects firms that issue crypto derivatives, their suppliers, including brokers, among others.
Risks FCA warns against
The UK regulators categorically highlighted five concerns bordering them as regards profit on products they have invested in.
The regulators listed consumer protection, price volatility, Product complexity, and marketing materials as what investors are to look out for.
