According to the FCA, investors could lose “all their money” if they invest in crypto products offering high returns, CoinDesk reported. The FCA said customers should make sure they understand what they’re investing in.
Customers “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 said, per CoinDesk.
There’s also high price volatility in crypto assets that can add an extra layer of volatility, making it difficult to price assets right and putting consumers at a steeper risk level.
Those working in crypto asset-related investments probably won’t have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme, in addition, in case something goes wrong.
CoinDesk also reported that the FCA ban on the sale of cryptocurrency derivatives and exchange-traded notes, which are brought in as a consumer protection, began on Jan. 6.
There have been scam warnings before, such as one the Philippines SEC issued last July, saying that there were groups selling cryptocurrencies without a license, PTMNTS reported. The scams involved companies not registered properly to sell in the country. These could be considered Ponzi schemes in the way that they need referrals to let users make money.
Cryptocurrencies, as a broad category, PYMNTS reported, have begun to play more of a role in providing criminals an avenue to launder money and fund illicit activities, including terrorism. And as sanctions continue to grow, the focus on crypto will become more and more important.
There are also many points in which bringing currencies online could work with blockchain to bring greater transparency related to direct payments and distributed ledgers.