Now watchdog warns on Bitcoin
AFTER soaring to a record value, the price of cryptocurrency Bitcoin plummeted 21 pc in just two days. The Financial Conduct Authority this week launched an anti-money laundering register for legitimate cryptocurrency firms. Here, the regulator’s executive director of enforcement and market oversight MARK STEWARD explains why Bitcoin and other cryptocurrencies such as Ethereum and Ripple are a risk . . . DESPITE high market prices, crypto assets such as Bitcoin are not linked to any underlying commodity or tangible assets and so most have little or no intrinsic value.
They largely fall outside financial regulation. If things go wrong, you may not be able to claim against the Financial Services Compensation Scheme. Prices are volatile — prone to extreme swings in price.
Those creating and selling cryptocurrencies do not have to disclose information that might help understand what is driving the changes.
Some crypto asset firms may also be associated with financial crime or money laundering.
Firms not listed on the FCA’s full or temporary anti-money laundering registers are breaking the law and must be avoided.
It is also important to check that the contact details the firm has given you match our register to avoid fake or clone companies.
There are potential benefits to crypto assets, such as in cross-border payment services, and the Government is holding a consultation on how these can be harnessed.
But we should be in no doubt there are real risks to these investments.
Anyone interested in crypto assets should remember: promises of high profits mean high risks. Only invest money that you can afford to lose.