Given Ruvic / Reuters
- Consumers can ‘lose all their money’ if they invest in cryptocurrencies like Bitcoin, warned the UK financial agency.
- Bitcoin reached a record high of almost $ 42,000 on Friday, but has since dropped dramatically to around $ 35,000.
- Regulators are increasingly concerned about cryptocurrencies like Bitcoin and have increased their attention to digital assets.
- Visit the Business Insider home page for more stories.
Consumers who invest in cryptocurrencies may well “lose all their money”, warned the UK financial regulator, as Bitcoin’s volatile price recedes from a historic high of nearly $ 42,000.
Bitcoin’s astonishing increase of more than 300% in the past year has caught the attention of the public and institutional investors. But the cryptocurrency is highly volatile and has dropped about 15% from a record high of around $ 41,800 on Friday to $ 34,645 on Monday.
The cryptocurrency craze has also attracted the watchful eyes of financial regulators around the world. They fear that amateur investors could be sucked in, only for currencies like Bitcoin to collapse, as it did in 2018.
The Financial Conduct Authority (FCA) of Great Britain put this severely: “If consumers invest in these types of products, they must be prepared to lose all their money.”
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The agency said it is concerned about some companies offering investments in cryptocurrencies or products linked to them, while seeking to capitalize on the rise.
The company said in a statement: “The significant volatility of cryptoassets prices, combined with the inherent difficulties in reliably evaluating cryptoassets, puts consumers at high risk for losses.”
“The complexity of some products and services related to cryptoassets can make it difficult for consumers to understand the risks,” he added.
“There is no guarantee that cryptoassets can be converted back into cash. The conversion of a cryptoasset back to cash depends on the demand and supply on the market.”
Memories of the Bitcoin price collapse between late 2017 and early 2019 – when it dropped from almost $ 20,000 to less than $ 4,000 – are weighing on regulators’ minds.
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The FCA also emphasized that cryptocurrencies like Bitcoin are not regulated. According to the report, investors are unlikely to seek compensation or claims “if something goes wrong”.
Regulators are trying to tighten the rules around cryptocurrencies, however. Since Sunday, the FCA has required that all UK cryptocurrency companies be registered as part of regulations to combat money laundering.
In December, the U.S. Financial Crimes Enforcement Network suggested that companies could be forced to collect information about cryptocurrency wallet holders.
Twitter chief executive Jack Dorsey, who also runs the payments company Square, is among the many critics of the idea, for whom the unregulated nature of cryptocurrencies is one of the main attractions of the market.
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