Crypto Assets Risk Summary

If you plan to purchase crypto assets as an investment you should be aware that due to the potential for losses, the Financial Conduct Authority (FCA) considers crypto assets to be high risk investment.

What are the risks?

You could lose all the money you invest. The performance of most crypto assets can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in crypto assets.

Additionally, the crypto market is generally unregulated. There is a risk of losing money or any crypto assets you purchase due to risks such as cyber-attacks, financial crime, lack of liquidity and firm failure.

You should not expect to be protected if something goes wrong

The Financial Services Compensation Scheme (FSCS) doesn’t protect this type of investment because it’s not a ‘specified investment’ under the UK regulatory regime – in other words, this type of investment isn’t recognised as the sort of investment that the FSCS can protect.

Learn more by using the FSCS investment protection checker here.

Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA regulated firm, FOS may be able to consider it.

Learn more about FOS protection here.

You may not be able to sell your investment when you want to

There is no guarantee that investments in crypto assets can be easily sold at any given time. The ability to sell a crypto asset 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 and you may be unable to sell your crypto assets at the time you want.

Crypto asset investments can be complex

Investments in crypto assets can be complex, making it difficult to understand the risks associated with the investment. You should do your own research (also known as due diligence) before deciding to invest. If something sounds too good to be true, it probably is.

Don’t put all your eggs in one basket

Putting all your capital into a single type of investment is risky. Spreading your capital 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.

If you are interested in learning more about how to protect yourself, visit the FCA’s website here.

For further information about crypto assets, visit the FCA’s website here.