FCA warns consumers on crypto investing as Bitcoin falls

The Financial Conduct Authority warned consumers they should be prepared to lose all their money when making investments linked to cryptoassets as the values of Bitcoin and other digital currencies fell sharply.

The City regulator said some firms were selling cryptoasset investments or products linked to those assets with the promise of high returns. The FCA said these investments had very high risks including:

• Lack of consumer protection, for example through the Financial Ombudsman Service or the Financial Services Compensation Scheme
• Volatile prices that create a high risk of losses
• Complex products that are difficult to understand and may not be convertible back to cash
• High charges and fees
• Misleading marketing materials that overstate returns or understate risks.

The regulator said consumers should be wary if they are contacted out of the blue by people selling cryptoasset investments, put under pressure to invest quickly or promised returns that sound too good to be true.

"If consumers invest in these types of product, they should be prepared to lose all their money," the FCA said. "As with all high-risk, speculative investments, consumers should make sure they understand what they’re investing in, the risks associated with investing and any regulatory protections that apply."

Bitcoin fell more than 12% overnight to as low as $33,447 and Ethereum, which often moves in line with Bitcoin, dropped as much as 20% to $1,007.51. Rising US bond yields hit the value of non-income paying assets but Bitcoin has still more than quadrupled in the past year.