Britain’s Financial Supervisory Authority on Monday issued a stern warning to cryptocurrency traders after bitcoin took investors on another wild ride.
The Financial Conduct Authority in the United Kingdom said that dealers who invest in the cryptocurrency market “should be prepared to lose all their money”, given that there are many risks hovering around this type of currency.
The British Authority confirmed that companies promoting cryptocurrency investments “may exaggerate the returns that investors will reap and reduce market risks,” noting that it is unlikely that investors who buy the currency will be able to access “consumer protection” if something goes wrong.
The agency, known as the FCA, said in the warning: “Consumers should be aware of the risks, and consider whether investing in high amounts on a crypto asset basis is appropriate for them. They should check and carefully consider the business of the crypto-asset involved.”
Officials also indicated that there is no guarantee that digital currencies can be converted back into cash, and that their prices have been known to fluctuate wildly.
Monday provided another example of this volatility, as the price of Bitcoin – the world’s largest cryptocurrency – fell after a record high last week.
On Monday, Bitcoin was trading at $ 31,702.83, down more than 12 percent compared to Sunday, and about 24 percent from its all-time high of $ 41,962.36, which it reached Friday, according to CoinDisk data.
Investors helped raise the price of bitcoin in recent weeks, amid growing perceptions that it provides protection against inflation and could become an alternative to gold.
But the British Financial Conduct Authority describes cryptocurrencies widely as risky “speculative” investments that could empty investors’ pockets, given how weak their regulation is.