Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 minutes to learn more.

Risk Summary

Estimated reading time: 2 min

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

1. You could lose all the money you invest

Cryptocurrencies are extremely volatile in nature, with the value fluctuations being very unpredictable. You should do your own research into the history of the particular currency you are considering investing in, and be aware that you may lose the money that you invest.

2. You won’t get your money back quickly

Although you may have seen people making serious profits from some cryptocurrency historically, this is far from the norm. Most cryptocurrencies fluctuate widely in value, and the cryptocurrency you are considering investing in is just as likely to drop in value as rise. This means that making your money back may take a lot longer than anticipated, and you should be aware that the original value may never be realised.

3. Don’t put all your eggs in one basket

Putting all your money into a single type of investment is very risky. Spreading your money across different investments makes you less dependent on any one doing well. A good rule of thumb is not to invest more than 10% of your available investment funds into high-risk investments.

4. The value of your investment can decline

Due to the volatile nature of cryptocurrency value, the value of your investment can easily decline. This could further reduce your chances of receiving a return on your investment.

5. The online Crypto Exchange platform could fail

The cryptocurrency industry has recently seen several large organisations and cryptocurrency exchanges go out of business. If the platform fails, it may be impossible for you to re-collect your original investment. It could take years to get your money back, if at all. Even if the platform has safeguarding of your funds and other plans in place to prevent failure, this is no guarantee.

6. You are unlikely to be protected if something goes wrong

The business offering this investment is not regulated by the FCA. Protection from the Financial Services Compensation Scheme (FSCS) only considers claims against failed, regulated firms. Learn more about FSCS protection here.

Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against a non-FCA-regulated platform, FOS may not be able to help you. Learn more about FOS protection here.

If you are interested in learning more about how to protect yourself, visit the FCA’s website here.