Brits with cryptocurrency warned they could lose ALL their money as it’s revealed 2.3million have invested
BRITS with cryptocurrency should be “prepared to lose all their money” as 2.3million have now invested in assets, the financial watchdog has revealed.
New data from the Financial Conduct Authority shows the number of people piling cash into crypto investments is up 21% from 1.9million last year.
But only roughly a third (38%) consider it a gamble to invest, despite experts warning about the dangers of doing so.
While you should never put your money into something you don’t understand, the FCA found only 71% of Brits know what "cryptocurrency" actually means.
Worryingly, half (53%) said they’re planning to invest more after having a "positive experience so far", up from 41% last year.
This is despite reports of Brits losing hundreds of thousands of pounds to crypto scams.
FCA consumers and competition executive director Sheldon Mills said that while there is “increased interest” in the crypto market, Brits should be aware of the risks of investing.
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
He said: “It is important for customers to understand that because these products are largely unregulated that if something goes wrong they are unlikely to have access to the FSCS or the Financial Ombudsman Service.
“If consumers invest in these types of products, they should be prepared to lose all their money.”
Experts have warned that buying cryptocurrencies, like any investment, is a very risky business and making money is never guaranteed.
You should make sure you know the risks of investing in cryptocurrencies and that you can afford to lose any money you put in.
Cryptocurrencies are highly volatile, so the value of your investments can go down as well as up in the blink of an eye.
Hargreaves Lansdown senior investment and markets analyst Susannah Streeter said the FCA’s new research shows Brits are taking a “dangerous financial attitude” to crypto assets.
She said: “It’s no surprise that the FCA has used the publication of this research as an opportunity to issue a fresh warning that people risk losing all their money if they trade in crypto assets.
“There is a danger that because of so many posts and tips swirling around on social media, people may have been persuaded to invest emergency savings to make a quick buck, leaving them without a financial safety net.”
While AJ Bell financial analyst Laith Khalaf said the fact that 14% of Brits have borrowed money to invest, according to the FCA,is “simply terrifying”.
He said: “Buying cryptocurrency is a dangerous financial activity, and while many consumers appear to understand the risks, some are carelessly playing with fire.”
It comes as regulators have proposed tough new rules to crackdown on cryptocurrencies.
Banks holding and dealing in cryptocurrencies could be forced to put more money aside to cover potential losses from the risky asset.
While China is cracking down Bitcoin operations across the country, with 1,100 arrested on money laundering charges.
Elon Musk has performed another U-turn over Bitcoin, saying it will accept the cryptocurrency if it cleans up.
Bride-to-be Melissa Martin told The Sun last year how she “hit the bottom” after being conned out of almost £30,000 by fraudsters claiming to be Bitcoin investors.
While a school teacher lost £9,000 to a fake “Elon Musk” Bitcoin scam – which would have gone towards a deposit for a new home.
Source: Read Full Article