Why this matters
Estimated reading time: 2 minutes. Due to the potential for losses, the Financial Conduct Authority (FCA) considers cryptoasset investments to be very high risk.
1. You could lose all the money you invest
The performance of most cryptoassets can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you put into cryptoassets. The cryptoasset market is largely unregulated, and there is a risk of losing money or any cryptoassets you purchase due to risks such as cyber-attacks, financial crime and firm failure.
2. You should not expect to be protected if something goes wrong
- The Financial Services Compensation Scheme (FSCS) does not protect this type of investment because it is not a 'specified investment' under UK financial services law.
- The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm's cryptoasset activities. [Lawyers to confirm.]
3. You may not be able to sell when you want to
There is no guarantee that investments in cryptoassets can be easily sold at any given time. The ability to sell a cryptoasset depends on various factors, including the supply and demand in the market at that time. Operational failings such as technology outages, cyber-attacks and comingling of funds could cause unwanted delay.
4. Cryptoassets can be complex
Cryptoassets can be very complex, making it difficult to understand the risks associated with holding them. You should do your own research before using cryptoassets. If something sounds too good to be true, it probably is.
5. Don't put all your eggs in one basket
Putting all your money into a single type of investment is risky. Spreading your money across different investments makes you less dependent on any one to do well. A good rule of thumb is not to invest more than 10% of your money in high-risk investments.
Find out more
For further information about cryptoassets, visit the FCA's website at fca.org.uk/investsmart. See also our regulatory status.