Know the risks before you buy.
Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong.
Last updated: May 2026 · Estimated reading time: 2 min
Five risks, in plain words.
Each risk in a sentence, with the full text below. The summaries are a guide; the full text is what applies.
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.
You could lose all the money you invest
Prices can fall as fast as they rise, and hacks, fraud or a firm failing could also cost you what you put in.
You should not expect to be protected if something goes wrong
The UK’s compensation scheme (FSCS) doesn’t cover this investment, and the Financial Ombudsman Service can’t consider complaints about it.
You may not be able to sell your investment when you want to
Selling depends on someone wanting to buy at that moment, and outages or attacks can delay you.
Cryptoasset investments can be complex
It can be hard to see what you’re taking on. Do your own research, and be wary of anything that sounds too good to be true.
Don't put all your eggs in one basket
Spreading your money across different investments lowers the risk. A common rule of thumb: no more than 10% in high-risk investments.
Not all cryptoassets bear the same risks
Some cryptoassets may have additional risks specific to the nature of the cryptoasset.
- Stablecoins
- DeFi Tokens
- Memecoins
- Staked Assets
- Loss of keys to non-custodial wallet
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.
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 recognised as the sort of investment that the FSCS can protect. Learn more by using the FSCS investment protection checker here.
The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm. Learn more about FOS protection here.
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 a cryptoasset depends on various factors, including the supply and demand in the market at that time.
Operational failings such as technology outages, cyber-attacks and comingling of funds could cause unwanted delay and you may be unable to sell your cryptoassets at the time you want.
Cryptoasset investments can be complex
Investments in cryptoassets can be complex, making it difficult to understand the risks associated with the investment.
You should do your own research before investing. If something sounds too good to be true, it probably is.
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 anyone to do well.
A good rule of thumb is not to invest more than 10% of your money in high-risk investments.
Not all cryptoassets bear the same risks
Some cryptoassets may have additional risks specific to the nature of the cryptoasset.
- Stablecoins
- May not always maintain a 1:1 peg to their underlying asset, leading to value fluctuations.
- Their value depends on issuer reserves, regulatory status, and market conditions, amongst other factors.
- DeFi Tokens
- Prices are highly volatile and often tied to experimental or unproven protocols.
- Smart contract vulnerabilities may lead to loss of funds.
- Memecoins
- Highly speculative and prone to extreme price swings due to hype and social media trends.
- Memecoins lack intrinsic utility, making their long-term value uncertain.
- Staked Assets
- Lock-up periods may prevent access to funds for a set duration.
- Slashing penalties could result in the loss of staked funds due to network rules.
- Loss of keys to non-custodial wallet
- Losing private keys or recovery phrases means losing access to funds permanently.
- No third party, including the wallet provider, can recover or restore lost wallets.
Where to learn more
For more information about specific asset risks, please read our Asset Risk Summary here.
If you are interested in learning more about how to protect yourself, visit the FCA's website here Opens in a new tab. For further information about cryptoassets, visit the FCA's website here Opens in a new tab.