The Financial Conduct Authority (FCA) has urged caution when it comes to consumers investing in the ‘largely unregulated’ digital currency market.
It comes as the regulatory body reported a significant and continued spike in consumers that are engaging with cryptocurrency investment. Nonetheless, according to the group’s research, a growing number of users are reporting a positive experience when it comes to crypto investing.
Sheldon Mills, FCA Executive Director,Consumers and Competition, said: “The research highlights increased interest in cryptoassets among UK customers. The market has continued to grow, and some investors have benefitted as prices have risen.
“However it is important for customers to understand that because these products are largely unregulated that if something goes wrong they are unlikely to have access to the FSCS or the Financial Ombudsman Service.
“If consumers invest in these types of products, they should be prepared to lose all their money.”
It does come amid a backdrop of a decreasing understanding of cryptocurrency, with 71% of respondents being able to pick the correct statement when it comes to defining cryptocurrency.
As the pandemic has continued, the presence of digital currencies in global economies and retail has increased exponentially, with consumers eyeing alternative and more digital ways to make transactions.
In embracing bitcoin as legal tender, El Salvador also underlined the role of digital currency in financial inclusion, something that has taken on elevated prevalence through the pandemic.
In a statement shared with the Bitcoin conference in Miami, Florida, the widely supported President emphasised: “In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy, and in the medium and long term, we hope that this small decision can help us push humanity at least a tiny bit into the right direction.
“Financial inclusion is not only a moral imperative but also a way to grow the country’s economy, providing access to credit, savings, investment and secure transactions.
“We hope that this decision will be just the beginning in providing a space where some of the leading innovators can reimagine the future of finance.”