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The Financial Conduct Authority (FCA) deems this investment high-risk due to the potential for significant financial losses. Before making any investment decisions, carefully consider the associated risks.

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What are the key risks?

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1. You could lose all the money you invest

The performance of most crypto assets 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 crypto assets. The crypto asset market is largely unregulated. You may lose money or any crypto assets you purchase due to risks such as cyber-attacks, financial crime, and firm failure.

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

The Financial Services Compensation Scheme (FSCS) doesn’t protect this type of investment because it’s not a ‘specified investment’ under the UK regulatory regime: in other words, this type of investment isn’t recognized as the sort of investment the FSCS can protect. Learn more using the FSCS investment protection checker.

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

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

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4. Cryptoasset investments can be complex

Investments in crypto assets can be complex, making it difficult to understand the risks associated with the investment. Do your own research before investing. If something sounds too good to be true, it probably is.

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5. Don’t put all your eggs in one basket

Investing all your money in a single type of investment is risky. Spreading your money across different investments makes you less dependent on any one for success. A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Learn more about investing here.

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Learn more

To learn more about protecting yourself, visit the FCA’s website. See the FCA’s Crypto: The basics article for further information about crypto assets.