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Cryptocurrency risks: UK Regulator reiterates stance on crypto investments

Cryptocurrency risks

TL;DR Breakdown

  • Cryptocurrency risks are ignored after BTC reached its all-time high.
  • FCA indicates that cryptocurrencies investments have increased in 2021.

Although the UK authorities have struggled to slow down the crypto trade, they have not achieved their goals. According to the analysis, over 2 million people in the UK invest in digital currencies despite the cryptocurrency risks. This figure has increased when compared to last year’s figures within the region.

While authority over cryptocurrencies has improved, investors have diminished their ability to understand. According to the Financial Conduct Authority, people are investing in cryptocurrencies without understanding them. On average, UK citizens trade crypto with at least 300 euros.

Investments increase in a downtrend

Cryptocurrency risks

The FCA has indicated that cryptocurrencies investment increases are achieved amid a downtrend. Cryptocurrency risks are in full swing because tokens like Bitcoin have hit their all-time high and suddenly plummeted. However, the cryptocurrency is on the mend, and this is what may attract the average investor.

The investor’s vision towards cryptocurrencies is as a bet more than as a stable commercial medium. The cryptocurrency risks became more apparent with the BTC crash when it hit its all-time high above $60,000. About 38% of people who invest in crypto take it as a gamble; hoping that the cryptocurrency will increase.

Over 78% of people in the country have been interested in cryptocurrencies since 2021. This figure has increased compared to 73% of investors interested in cryptocurrencies last year.

FCA adds that digital currency recognition in the UK is attributed to Bitcoin.

Do UK investors understand cryptocurrency risks?

Cryptocurrency risks are discussed almost daily in the news, but many UK investors do not understand them. Cryptocurrencies are not regulated, with over 80% of consumers in the country understanding the risks, but a scant 12% think otherwise.

AJ Bell’s financial analyst Laith Khalaf thinks the research shown by FCA is moderate and sensible. However, the Financial Conduct Authority shows that some investors should educate themselves on cryptocurrency risks before joining the game.

But FCA’s CEO of consumers and competition, Sheldon Mills, clarifies that the research shows a great interest in cryptocurrencies. However, Mills suggests that people in the UK are unclear on the rules of the game.

Mills indicates that the consumer should understand cryptocurrencies and the laws that apply to them. As a product is not regulated, the FSCS will not act if something terrible happens in the business. Although the business is risky, this will not prevent many people in the UK and other countries from trusting and trading crypto.

Carisbel Guaramato

Carisbel Guaramato

An avid content creator for over 4 years, Carisbel spends her time on blogs and technology news. She honed her skills as a social communicator and now finds crypto and blockchain news events worldwide for transmission through Cryptopolitan's neutral and incisive way.

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