They have put it nice and clear for you.
Consumers should be wary if they’re contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true.
The FCA’s concerns about high-return investments based on cryptoassets include:
- 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.
Consumers should be aware of the risks and fully consider whether investing in high-return investments based on cryptoassets is appropriate for them. They should check and carefully consider the cryptoasset business involved.
What to do:
Step 1: Consumers should check if the firm they’re using is on the Financial Services Register or list of firms with Temporary Registration (Note: appearing on the Temporary Registration Register does not mean that the FCA has assessed them as fit and proper, nor that the FCA has determined their application for the purposes of the Money Laundering Regulations).
Step 2: If they’re not, consumers should ask the firm whether they are entitled to carry on business without being registered with the FCA.
Step 3: If they’re not, the FCA suggests that consumers should withdraw their Cryptoassets and/or money. This is because the firm is operating illegally if it has not ceased trading by 9 January 2021.