At the time when the cryptocurrency market suffered a serious collapse, the Financial Market Conduct Authority (FCA) issued a warning about cryptocurrency investment.
In a statement on January 11, FCA stated that cryptocurrency investment and borrowing are risky and emphasized that investors should be prepared to lose all their funds when investing in cryptocurrencies.
FCA listed a series of risks including price volatility, product complexity and transaction fees, saying that investors are taking risks related to cryptocurrencies:
“Users should be aware of these risks and fully consider whether high-return investments based on encrypted assets are suitable for them. They should check and carefully consider related crypto asset businesses.”
FCA also stated that if problems arise, cryptocurrency investors are unlikely to receive help from major consumer protection agencies, such as the British Financial Ombudsman or the Financial Services Compensation Scheme.
FCA pointed out that companies providing cryptocurrency-related services should ensure that they comply with all relevant regulatory requirements and are authorized by the FCA. FCA wrote that from January 10, 2021, all crypto asset companies in the UK must register with the FCA in accordance with anti-money laundering regulations. FCA added: “It is a criminal offence to operate a company without registration.”
After Bitcoin (BTC) hit a record high of nearly $42,000 on January 8, the crypto market fell sharply, and then the FCA issued this warning to cryptocurrency investors. On January 11, Bitcoin suffered a massive sell-off, once it fell below the $33,000 mark. According to data from the Cointelegraph Bitcoin Price Index, as of the publication of the article, the price of Bitcoin was around $35,000, a drop of about 14% in the past 24 hours.
The recent cryptocurrency market crash is not limited to Bitcoin. The top 10 cryptocurrencies by market capitalization have all suffered heavy losses. Altcoins such as Ethereum (ETH) have fallen by nearly 19%.
