Britain’s financial watchdog issued a serious warning to cryptocurrency traders on Monday, while Bitcoin took investors on another wild journey.
The UK’s Financial Conduct Authority said consumers investing in the hot cryptocurrency market “should be prepared to lose all their money” because there are so many risks involved.
Firms that promote cryptocurrency investments may overestimate the returns that traders will reap and underestimate the risks of the market, and investors who buy will not have access to consumer protection if something goes wrong, regulators said.
“Consumers should be aware of the risks and fully consider whether investing in high-yield investments based on cryptocurrencies is appropriate for them,” the agency, known as the FCA, said in the warning. “It should carefully monitor and consider the cryptocurrency activity involved.”
Officials also noted that there is no guarantee that digital currencies can be converted back into cash and that their prices are known to rise wildly.
Monday provided yet another example of volatility, as the price of Bitcoin – the world’s largest cryptocurrency – fell after a record rally last week.
Bitcoin was trading at $ 33,554.28 as of 9:51 a.m., down nearly 15% from a day earlier and about 20% from its all-time high of $ 41,962.36 on Friday, according to CoinDesk data. .
Other popular currencies also suffered heavy losses – Ethereum, the second largest cryptocurrency by market value, recently fell about 20% to $ 1,031.48, while XRP fell about 15%. by about 28 cents.
Institutional investors have contributed to the rise in the price of Bitcoin in recent weeks, amid growing perceptions that it offers protection against inflation and could even become an alternative to gold.
But the FCA has discarded cryptocurrencies in general as risky, “speculative” investments that could empty the pockets of retailers, given how poorly regulated they are.
“Investing in cryptocurrencies or related investments and loans generally involves taking very high risks with investors’ money,” the agency warned. “… As with all high-risk speculative investments, consumers should ensure that they understand what they are investing in, the risks associated with the investments and any regulatory protection that applies.”