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
- The performance of most cryptoassets can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in cryptoassets.
- The cryptoasset market is largely unregulated. There is a risk of losing money or any cryptoassets you purchase due to risks such as cyber-attacks, financial crime and firm failure.
2. You should not expect to be protected if something goes wrong
- The Financial Services Compensation Scheme (FSCS) doesn't protect this type of investment because it's not a 'specified investment' under the UK regulatory regime – in other words, this type of investment isn't recognised as the sort of investment that the FSCS can protect. Learn more by using the FSCS investment protection checker.
- The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm or Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA regulated firm, FOS may be able to consider it. Learn more about FOS protection here.
3. You may not be able to sell your investment when you want to
- There is no guarantee that investments in cryptoassets can be easily sold at any given time. The ability to sell a cryptoasset depends on various factors, including the supply and demand in the market at that time.
- Operational failings such as technology outages, cyber-attacks and comingling of funds could cause unwanted delay and you may be unable to sell your cryptoassets at the time you want.
4. Cryptoasset investments can be complex
- Investments in cryptoassets can be complex, making it difficult to understand the risks associated with the investment.
- You should do your own research before investing. If something sounds too good to be true, it probably is.
5. Don't put all your eggs in one basket
- Putting all your money into a single type of investment is risky. Spreading your money across different investments makes you less dependent on any one to do well.
- A good rule of thumb is not to invest more than 10% of your money in high-risk investments.
If you are interested in learning more about how to protect yourself, visit the FCA's website here.
For further information about cryptoassets, visit the FCA's website here.
Ready to get started?
Let’s look at which crypto exchanges the experts rate best by category.
More guides on Finder
-
Finder Crypto Innovation Awards 2024
The Finder Crypto Innovation Awards recognise cutting-edge developments in the cryptocurrency market, as voted by experts.
-
Binance Coin (BNB) price prediction 2025
Read our expert analysis on Binance Coin and how the token will perform in the future.
-
Bitcoin halving: What is it and why is it important?
A Bitcoin halving is when the rewards for mining Bitcoin are cut in half. Find out more about this event including when and how often it happens, and what it means for Bitcoin’s value.
-
Bitcoin (BTC) price prediction January 2025
A panel of industry specialists give us their predictions on the price of Bitcoin to 2035.
-
Ethereum (ETH) price prediction January 2025
A panel of industry specialists give us their predictions on the price of Ethereum to 2035.
-
Cryptocurrency statistics: How many people invest in crypto in 2025?
Find out how many people in the UK own cryptocurrency, how this varies across age groups and other crypto statistics.
-
Finder Cryptocurrency Predictions Report 2025
Every three months, Finder consults a panel of industry specialists to get an expert view on what the future could hold for crypto. This is a summary of those findings.
-
BABB review
Can cryptocurrency be used to build a peer-to-peer bank for everyone? BABB is certainly trying, so we took a look at how it’s supposed to work.
-
Cardano (ADA) price prediction November 2024
A panel of industry specialists give us their predictions on the price of ADA to 2030.
-
Litecoin (LTC) price prediction November 2024
A panel of industry specialists give us their predictions on the price of Litecoin to 2030.