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The FCA Made a Bitcoin CFD risk warning.
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The FCA Published a Cryptocurrency CFD risk warning.
Bitcoin CFD
With the surge of cryptocurrencies craze in the financial sector, a alert has been published to buyers. The UK regulatory body prompted caution to market players by highlighting the pitfalls of trading in cryptocurrency CFDs. .
Earlier this year, the British regulator has informed market players about the risks related to ICO. Soon after this warning, the UK regulator now issues a warning related to cryptocurrency contracts for differences (CFDs), advocating investors to take extreme caution as such assets are highly risky.
The UK Financial Conduct Authority (FCA) warned traders stating that CFDs with cryptocurrencies as the underlying investment are risky investment.
The alert indicates:
“Contracts for differences (CFDs), including financial spread bets, with cryptocurrencies as the underlying investment, are increasingly being marketed to consumers. These products are extremely high-risk, speculative products. This warning is to inform consumers about the risks of buying them.”
The FCA has also warned investors last month regarding cryptocurrency CFDs as various online derivative firms in UK are now offering Bitcoin and Ethereum trading on their platforms.
The FCA regulates The UK's Financial markets, including cryptocurrency CFDs and gives all levels of safety to the investors. CFDs allow traders to speculate on the changing price of an asset. Traders often enjoy leverage during the investment in the CFDs. Nonetheless, the FCA reiterates that trading cryptocurrency CFDs are risky and highly high-risk investments because of their unstable feature.
In many events, crypto tokens have shown swings of more than 30 percent and in some cases even 50 percent of their values. :
“We are concerned about the growth in retail clients trading in CFDs, particularly those offered with a cryptocurrency as the underlying asset… The price volatility of the asset comes with significant risks to retail investors.”
Bitcoin rates have been remarkably volatile in recent months striking highs of almost $19,000 before sliding to 7500 in a short time.
