Learn more about the risks connected to investing in cryptoassets

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk. Customers from the UK should get acquainted with the information below.

The Financial Conduct Authority (FCA), which oversees financial matters in the UK, has made significant changes to how companies can advertise cryptoassets. Starting from 8 October 2023, stricter rules apply to companies promoting cryptoassets to people in the UK, including Wirex. These changes are designed to better protect investors.

What are the key risks?

1. You could lose all the money you invest

• The performance of most cryptoassets can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in cryptoassets.
• The cryptoasset market is largely unregulated. There is a risk of losing money or any cryptoassets you purchase due to risks such as cyber-attacks, financial crime, and firm failure.

2. You should not expect to be protected if something goes wrong

• The Financial Services Compensation Scheme (FSCS) does not protect this type of investment because it is not a 'specified investment' under the UK regulatory regime. Check the FSCS investment protection checker.
• The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm. Learn more about FOS.

3. You may not be able to sell your investment when you want to

• There is no guarantee that investments in cryptoassets can be easily sold at any given time. The ability to sell depends on supply and demand in the market at that time.
• Operational failings such as technology outages, cyber-attacks, and comingling of funds could cause unwanted delays, meaning you may be unable to sell your cryptoassets when you want to.

4. Cryptoasset investments can be complex

• Investments in cryptoassets can be complex, making it difficult to understand the associated risks.
• You should do your own research before investing. If something sounds too good to be true, it probably is.

5. Not all cryptoassets are the same

• Some cryptoassets may have additional risks specific to their nature.
• Stablecoins carry vulnerabilities. Algorithmic stablecoins are not backed by a currency and can experience significant volatility.

6. Don't put all your eggs in one basket

• Putting all your money into a single type of investment is risky. Spreading your money across different investments makes you less dependent on any one asset performing well.
• A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Learn more.

Not all cryptoassets are the same, and it is crucial to know the specific risks before you invest. Check out our asset risk summaries for a breakdown of key risks across different types of cryptoassets.

For comprehensive guidance on safeguarding yourself in the cryptoasset space, the FCA's website offers valuable resources. You can also explore the FCA's crypto basics page to stay informed as the market continues to evolve.