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 here.
The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm. 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. Not all cryptoassets are the same
Some cryptoassets may have additional risks specific to their nature.
Stablecoins carry vulnerabilities. Algorithmic stablecoins aren’t backed by a currency and can experience significant volatility. Please read more here.
6. 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. Learn more here.
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.
For UK user: What happens if I don't pass the Crypto Investing Risk Assessment?
Due to Financial Promotions Regulations in the UK, a customer has to demonstrate a certain level of understanding of Ramp Network as a business and the risks involved with purchasing crypto. To protect our customers, we have to limit the number of attempts you can take this assessment. If you have failed the assessment four times, you will not be able to take it again and your account will be locked. Unfortunately, you will not be able to appeal this decision.
Summary
While crypto investing offers exciting opportunities, it also comes with risks that are distinct from traditional investments. Being aware of these risks, conducting thorough research, and investing responsibly are essential steps to navigate the crypto market successfully. Remember that the crypto market is evolving, so staying informed is your best defense against potential issues associated with those risks.