Last updated: 13 January 2026

Due to the potential for losses, the Financial Conduct Authority (FCA) considers cryptoasset investments to be high risk.
You should carefully consider whether you understand how cryptoassets work and whether you can afford to lose the money you invest.

Important Risk Warning

Cryptoassets are high-risk investments. You could lose all the money you invest.
Cryptoassets are not regulated in the UK in the same way as traditional financial products. You should not expect to be protected if something goes wrong.

Key Risks
1. You could lose all the money you invest
The value of cryptoassets can be extremely volatile. Prices can rise and fall rapidly and unpredictably. You should be prepared to lose all of your investment.

Past performance is not a reliable indicator of future results.

2. The cryptoasset market is largely unregulated
Cryptoassets are not covered by UK financial services regulation in the same way as traditional investments. This means:

• You are not protected by the Financial Services Compensation Scheme (FSCS)
• You may not be able to access the Financial Ombudsman Service (FOS) if something goes wrong
• You may be exposed to risks such as cyber-attacks, financial crime, operational failure, and insolvency of service providers

Cryptoassets are not considered a “specified investment” under UK regulation.

3. You may not be able to sell your investment when you want
There is no guarantee that cryptoassets can be sold at any given time. Your ability to sell depends on market demand and liquidity.

During periods of high volatility, market stress, or technical disruption, you may be unable to sell your cryptoassets when you want or at a reasonable price. Operational failures, cyber-attacks, or system outages may also delay or prevent transactions.

4. Cryptoassets are complex
Cryptoassets are complex products and may be difficult to understand. You should ensure that you fully understand how cryptoassets work before investing.
If an investment opportunity sounds too good to be true, it probably is.
You should carry out your own research and seek independent financial advice if required.

5. Lack of diversification increases risk
Putting all your money into one type of investment is risky. Spreading your investments across different assets may help reduce risk.

A general rule of thumb is not to invest more than 10% of your money in high-risk investments such as cryptoassets.

Protection and Compensation
• Cryptoassets are not protected by the Financial Services Compensation Scheme (FSCS)
• Poor investment performance is not covered by the Financial Ombudsman Service (FOS)
• Crypto staking is not regulated as a collective investment scheme under the Financial Services and Markets Act 2000

You should not expect regulatory protection if something goes wrong.

Stablecoins
What are stablecoins?

A stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to a fiat currency such as the Pound Sterling, US Dollar, or Euro.
 
Risks associated with stablecoins
Stablecoins are not risk-free. Key risks include:



Counterparty Risk

Stablecoins rely on third parties to manage and safeguard the reserves backing the token. If the issuer becomes insolvent or fails to maintain sufficient reserves, you may lose some or all of your investment.

Redemption Risk

There is no guarantee that stablecoins can always be redeemed for their underlying collateral, particularly during periods of market stress.


Collateral Risk

The assets backing a stablecoin may fall in value or become illiquid.

Foreign Exchange Risk

Many stablecoins are denominated in US dollars. UK users may be exposed to currency fluctuations.

Algorithmic Risk

Some stablecoins rely on algorithms rather than reserves. These mechanisms may fail, causing the stablecoin to lose its peg or become worthless.

Meme Coins
Meme coins derive their value primarily from online trends and community sentiment rather than from any underlying utility or business model.
Risks associated with meme coins
• Extreme price volatility


• Lack of intrinsic value or utility


• High risk of market manipulation, including pump-and-dump schemes


• Limited transparency around project teams and governance


• Increased risk of emotional and speculative trading


Meme coins can lose most or all of their value very quickly.
 
DeFi Tokens
Decentralised Finance (DeFi) tokens are associated with blockchain-based financial protocols such as decentralised exchanges and 



lending platforms.
Risks associated with DeFi tokens

Smart Contract Risk

Coding errors or vulnerabilities can result in the loss of funds.

Regulatory Risk

DeFi operates in an evolving regulatory environment. Future regulation may restrict or prohibit certain activities.


Rug Pulls and Exit Scams

Some projects may be abandoned by their developers, leaving investors with worthless tokens.

Oracle and Data Risk

Manipulation or failure of external data feeds can cause financial losses.

Liquidity Risk

Low liquidity can cause large price swings and make it difficult to exit positions.
 
Staked Cryptoassets
Staking involves locking cryptoassets to support a blockchain network in return for rewards.
Risks associated with staking


Liquidity Risk

Staked assets may be locked for a fixed period and may not be accessible on demand.


Rewards Are Not Guaranteed

Staking rewards can change or stop altogether.

Protocol Risk

Changes to the protocol may introduce vulnerabilities.

Slashing Risk

Validators may be penalised for misconduct or technical failures, resulting in loss of funds.
 
Ownership and Custody Risks
Cryptoassets are controlled through private cryptographic keys. Anyone with access to your private key can transfer your assets.

Crypto transactions:
• Are generally irreversible


• Cannot be cancelled once confirmed


• May be delayed by network congestion or technical issues


If your private keys are lost or stolen, your cryptoassets may be permanently lost.
 
Fraud and Cyber Risk
Cryptoassets are a target for fraud and cyber-attacks. Losses resulting from scams, phishing, hacking, or accidental transfers may not be recoverable.
You are responsible for ensuring that you understand who you are transacting with and for protecting your credentials and private keys.
 
Summary
Cryptoassets are speculative, high-risk investments.
They are not legal tender, are not backed by the UK government or the Bank of England, and do not benefit from the protections available for traditional financial products.
You should only invest what you can afford to lose.