Cryptocurrency asset investment is at its prime. Many investors, both beginners and big players, are starting to look to Bitcoin and other cryptocurrencies. However, the financial authority in the UK, namely the Financial Conduct Authority (FCA), warned that investing in crypto money (cryptocurrency) must be ready to swallow the bitter pill of loss. This warning exists because investments related to cryptocurrencies are high risk.
“FCA realizes that some companies offer investments in crypto assets, loans or investments. Which is related to crypto assets that promise high returns. If consumers invest in these types of products. They must be prepared to lose all their money,” said FCA, quoting from CNBC, Monday (11/1/2021).
Bitcoin Could Be a Market Bubble Suddenly Exploding
Bitcoin surged to a new record last week, up US $ 41,973. Investors increasingly view digital assets as hedges against inflation, similar to gold.
But bitcoin’s wild rise has led some to warn that it could be a market bubble that is likely to burst soon. The world’s most valuable cryptocurrency has skyrocketed by more than 300% in the last 12 months.
“Regulators are clearly concerned that the high risk inherent in crypto assets is exacerbated by fraudulent activity, as well as unregulated companies targeting consumers highlighting rewards, not potential losses,” said Laith Khalaf, Financial Analyst at AJ Bell.
Due to the increasingly wild Bitcoin volatility, finally the warning from the FCA in the cryptocurrency market was getting more intense. The FCA has gotten tough on cryptocurrencies recently by banning the sale of crypto derivatives to retail investors. The regulator, which introduced a new listing for the crypto asset business, warned that companies operating without registration were committing a crime.
“Consumers should ensure that they understand what they are investing in, the risks associated with investing, and any regulatory protections that apply,” said the FCA.
“For crypto asset-related investments, consumers may not have access to the Financial Ombudsman Service (FOS). Or the Financial Services Compensation Scheme (FSCS) if something goes wrong. Consumers should be alert if they are contacted suddenly, are pressured to invest quickly or promise a return. that sounds too good to be true, “he added.