Britainâ€™s financial watchdog has warned about the dangers of investing in cryptocurrency, days after bitcoinâ€™s price soared to a new record highs.
The Financial Conduct Authority (FCA) issued a statement on Monday warned people about the risks of putting their money into cryptoassets such as bitcoin.
â€œInvesting in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investorsâ€™ money,â€� the FCA said. â€œIf consumers invest in these types of product, they should be prepared to lose all their money.â€�
The FCA said crypto investors were unlikely to qualify for protection under the financial services compensation scheme and could not seek redress through the financial ombudsman service.
The watchdog has cautioned investors about the pitfalls of investing in crypto in the past. The latest warning comes amid renewed investor interest in the space and a recent surge in the price of bitcoin.
Bitcoin has rallied around 300% since October 2020 and has repeatedly reached new record highs in recent weeks. The worldâ€™s biggest cryptocurrency topped $41,000 per coin for the first time last week.
Analysts had been warning that a correction was due and the price fell dramatically over the weekend. Bitcoin has fallen by around 12% over the last 24 hours to trade around the $35,650 mark (BTC-USD).
Naem Aslam, chief market analyst at Avatrade, described bitcoinâ€™s decline as a â€œhealthy correctionâ€�.
â€œBitcoin prices are likely to find their support between $28K to $30K,â€� he said.
While investors enjoy few protections in the crypto space, companies that offer crypto investments are subject to regulation. The FCA reminded firms that new rules came into force on Sunday (10 January) requiring crypto companies to register with the watchdog and carry out money laundering checks.
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