Are you investing in cryptocurrencies? Then you must be keeping updates of the latest news and events in the crypto industry. The warning of the UK regulators can have a negative impact on the value of crypto assets. If you are investing in digital currencies, continue reading to know about the announcement, why the UK regulators think that investors can lose all their money.
According to the CoinDesk report, the UK regulators have warned crypto investors on Jan 11 that they may lose all their money. The primary reason behind this is as the price of Bitcoin has slid down around 15% from its last week’s high. After this price drop, the financial conduct of the authority of the UK warned investors to stay prepared to lose their money.
UK Regulator Warning to Crypto Investors
The financial conduct authority of the UK warned crypto investors to be prepared with their investments. These are some key points to know about the warning.
- The regulators said that investors must understand the risks associated with the crypto assets before investing in them because the crypto assets involve high-risks and speculative investments.
- FCA also warned the investors to stay away from investments that promised to offer high returns within a short span. These might seem very good at investing opportunities but may not be true.
- The regulators also warn the investors as crypto assets are highly volatile and not reliable. It puts the money of the investors at a high risk of loss.
- More importantly, the FCA has also clearly mentioned that if something goes wrong and crypto investors their money, their loss won’t be covered by any compensation schemes. That means they will not gain the compensation benefits from the FOS and the FSC Scheme.
- FCA also banned the sale of derivatives of crypto. It also banned the sale of ETNs. Regulators have taken these bans into action to protect the investors.
Continue reading to know more about the ban of selling of derivatives of cryptos and ETNs by the UK.
Key Points to Note Due to the Ban
In October 2020, the UK banned the selling of derivatives of crypto, and ETNs went into effect on 6th Jan 2021. Here are the key points to note due to the ban.
- The regulator said that it considers the crypto assets as ill-suited as it involved high-risk and can cause potential loss to the consumers.
- Some people are not happy with the ban, and they argue that it’s a setback for retail investors. They also said that retail investors should have access to the crypto assets in the same way institutional investors have.
- Dormant o’Riordan, a venture capitalist, said that consumers would choose to invest through unregulated firms like BitMEX and Deribit due to the ban. It can put them at more risk.
Why the UK regulators Warn Crypto Investors
It’s not the first time that the UK regulators are warning crypto investors. They have warned in the past, and again they reminded the investors about the high risk involved in crypto assets. Even if the regulators alerted the investors in the past, they said it out after the price of Bitcoin dropped below $33,000 from nearly $42,000 between Jan 10 and 11.
Hopefully, the above information has helped you to know about the reasons why the UK thinks crypto investors can lose all their money. For more information, visit https://bitcoinsystem.app
One important thing to keep in mind is that even if you are investing in cryptocurrencies, ensure that you are not taking much risk that can ruin your financial life. Please share what the UK’s warning meant to you?