A UK financial regulator warns consumers about a particular type of derivative contract based on cryptocurrencies.
In a statement posted on its website today, the Financial Conduct Authority (FCA) of the United Kingdom warned investors that they might consider entering into currency contracts in cryptographic or CFD currencies. Under a CFD, both parties agree to pay either party if the underlying value of an asset, in this case, an amount of cryptocurrency, changes over time. weather.
These products allow users to speculate on the prices of different assets, and while cryptocurrencies fall under this umbrella, they should be considered high risk, according to the agency.
CFDs are the responsibility of the FCA, which means that the companies that offer these products are the agency’s competence. In addition to the legal safeguards, the agency warned that “these protections will not compensate for commercial losses.”
The agency said:
“Cryptocurrency CFDs are a very high risk speculative investment, you should be aware of the risks involved and determine whether investing in CFD cryptocurrencies is appropriate for you.”
FCA reported price volatility, leverage, tariffs and financing costs, as well as price transparency as four risks associated with investment in cryptography-based CFDs. The agency also noted that the initial fees required to invest in a CFD based on cryptography are higher than for other contracts, and because of the volatility of cryptocurrency prices, an investor could end up putting more than just the product. they are worth it
Today’s launch is not the first time that FCA calls for calm around investments in cryptocurrencies. In June, Chris Woolard, Director of Strategy and Competition of the FCA, said “we have to be cautious” about it.
Then, in September, the FCA declared that the initial offers of currencies (OIC, for its acronym in English) are “very risky” and advised potential taxpayers to report on any possible fraud they may encounter.