FCA Warns Of Suspicious Companies That Promise High Returns

FCA warns investors of suspicious companies that are promising high returns before investors decide to allocate funds in these companies especially because of the current situation of lack of regulation. Following the latest developments, we are reading more about it in today’s cryptocurrency news.

Following the latest bullish developments in the crypto space, the UK Financial Conduct Authority-FCA warns investors of suspicious crypto companies that are promising high returns on crypto investments and said that the investors should be careful when investing in certain digital assets. The UK’s regulator outlined the risky nature of the industry saying that people should be prepared for worst-case scenarios like losing all money that they invested.

The cryptocurrency market saw major drops over the past 24hours and it has been on a bull run that was led by BTC in the past few weeks. Bitcoin’s price broke the $20,000 for the first time in late 2020 but then doubled down and hit a new all-time high of $42,000 with most altcoins following. These gains in a short period led to the creation of a lot of companies and projects which promised investors similarly high returns. The UK financial watchdog issued a warning and outlined potential risks that people tend to forget once there’s a huge bull market again:

 “As with all high-risk, speculative investments, consumers should make sure they understand what they’re investing in, the risks associated with investing, and any regulatory protections that apply.”

The FCA asserted that all investors that want to allocate funds in the crypto market should be prepared to lose their invested funds. all crypto companies operating in the UK have to be registered with the FCA under regulations in order to fight against money laundering. The warning also touched upon the new rules saying that if companies don’t register, the operation will be a criminal offense. People have to be wary of companies that are contracting them out of the blue to pressure them into investing in crypto and promising high returns to sound too good to be true.
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Some of these concerns that were associated with these offers include the lack of regulation of anti-money laundering requirements and the risk of price volatility in crypto assets as well:

 “Customers should be aware of the risks and fully consider whether investing in high-return investments based on cryptoassets is appropriate for them. They should check and carefully consider the cryptoasset business involved.”