- Consumers could “lose all their money” if they invest in cryptocurrencies such as bitcoin, the UK’s financial supervisor has warned.
- On Friday, bitcoin reached a record of almost $ 42,000, but has since fallen sharply to about $ 35,000.
- Regulators are increasingly concerned about cryptocurrencies such as Bitcoin and have increased their focus on digital assets.
- Visit the Business Insider homepage for more stories.
Consumers who invest in cryptocurrencies could “lose all their money,”
Bitcoin’s staggering growth of over 300% over the past year has attracted the attention of the public and institutional investors. But the cryptocurrency is highly volatile, falling about 15 percent from a record high of about $ 41,800 on Friday to $ 34,645 on Monday.
The craze for cryptocurrencies has also attracted the attention of financial regulators around the world. They worry that amateur investors could be sucked in just for currencies like Bitcoin to collapse in value, as they did in 2018.
The British Financial Conduct Authority (FCA) has stated emphatically: “If consumers invest in these types of products, they must be prepared to lose all their money.”
Read more: The $ 500 million crypto asset manager’s CEO breaks down 5 ways to evaluate bitcoin and decide whether to own it after the digital asset breaks $ 40,000 for the first time
The supervisor said it was worried about some companies offering investments in cryptocurrencies or related products as they sought to win the rally.
The statement said: “The significant price volatility in cryptocurrencies, combined with the inherent difficulties in reliably valuing cryptocurrencies, exposes consumers to a high risk of loss.”
“The complexity of some cryptocurrency products and services can make it difficult for consumers to understand the risks,” he added.
“There is no guarantee that cryptocurrencies can be turned back into money. The conversion of cryptocurrencies back into money depends on the supply and demand existing in the market.”
Memories of the collapse in the price of bitcoins between the end of 2017 and the beginning of 2019 – when it fell from almost $ 20,000 to $ 4,000 – weigh on the minds of regulators.
Read more: BANK OF AMERICA: Buy these 10 Dow shares to reap the rich dividends and long-term strategy prepared for return in 2021.
The FCA also stressed that cryptocurrencies such as bitcoin are largely unregulated. According to him, investors are unlikely to resort to compensation or complaints “if something goes wrong.”
However, regulators are trying to tighten rules around cryptocurrencies. As of Sunday, the FCA requires all British cryptocurrency companies to be registered in it as part of the anti-money laundering regulations.
The US Financial Crimes Network in December floated the idea that companies could be required to collect information about cryptocurrency portfolio holders.
Twitter CEO Jack Dorsey, who also manages the payment company Square, is among many critics of the idea, for whom the unregulated nature of cryptocurrencies is one of the main attractions in the market.
Read more: Bank of America says warning signs that stocks are flowing into the bubble area are rising – and exact points 6, which could signal a bear market, are starting