The Financial Conduct Authority (FCA) has cautioned consumers against overspending on crypto and digital assets, as the regulator expects the currency to crash.
Bitcoin reached a record-high $42,000 on Friday (January 8) but then registered a 28% slump just hours after, and declined all the way down to $30,200. Despite these dips in the currency's value, Bitcoin remains at record-high numbers.
In light of this the FCA has issued a cautionary note to businesses and consumers, arguing that while it's aware of the current gold rush for these types of assets, people are advised not to invest blindly into crypto asset firms that promise bumper returns.
In an official statement, the FCA explained that investments in crypto assets usually involved taking very high risks with investors' money and consumers should be aware of those dangers while spending more time studying what type of asset Bitcoin and other cryptocurrencies actually are.
Investors who end up duped into the crypto craze will not have access to the Financial Ombudsman Service to settle complaints nor would they be eligible for the Financial Services Compensation Scheme which covers losses up to £85,000 the regulator cautions.
The FCA also talked about the complexity of the services and products that crypto assets usually have, and added that in light of this, consumers cannot be absolutely certain about the type of purchase or investment they make.
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