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. Take 2 mins to learn more.
What do I need to do to sign up to a Southbank Investment Research crypto newsletter?
Why are there special requirements?
The verification requirements are in line with the new regulatory framework and rules imposed by the UK’s Financial Conduct Authority (FCA), designed to make sure that the investors are properly aware of the risks involved and have sufficient knowledge and understanding about investing in cryptoassets.
The UK’s Financial Conduct Authority has implemented new rules to strengthen financial promotion of investments in cryptoassets. Firms in the UK are required to assess the appropriateness of their customers for investments in cryptoassets, categorise their customers according to one of the two investor profiles and implement a cooling off period.
What is the FCA?
The FCA is a regulatory body which regulates firms providing financial services to consumers in the UK and maintains the integrity of the financial markets in the UK.
Why do I have to do the appropriateness test and investor profile categorisation?
The appropriateness test and investor profile categorisation are part of the new regulatory framework introduced by the FCA, designed to make sure that the investors can demonstrate they are aware of the risks involved and have sufficient knowledge and understanding of investing in cryptoassets.
Why can’t I retake the appropriateness test immediately?
You can retake the test, but you must wait for 24 hours before trying again.
Why do I have to categorise my investor profile?
This is a feature of the new rules introduced by the FCA, designed to ensure that promotions of investments in crypto assets are only made available to certain investor profiles considered appropriate to be aware of and understand the risks related to cryptoasset investing and trading.
What is a Restricted Investor?
A Restricted Investor will not invest more than 10% of their net assets in high-risk investments.
Net assets do not include:
- Your home (primary residence)
- Your pension (or pension withdrawals)
- Any rights under qualifying contracts of insurance
High-risk investments are defined as:
- Peer to peer (P2P) loans
- Investment based crowdfunding
- Units in a long-term asset fund
- Cryptoassets (such as Bitcoin)
- Unlisted debt and equity (such as companies not listed on an exchange like the London Stock Exchange)
Although the future remains uncertain for all of us, you should estimate the highest percentage of your net assets that you can envision potentially investing in the next 12 months, considering the present circumstances.
What is a High-net Worth Investor?
For a self-declared High-net Worth Investor, your annual income in the last financial year should be above £100,000 and/or you should have net assets of over £250,000.
What if I don’t fit in any of the available categories?
While most of our customers should fall into one of the categories provided, if you do not, we regret to inform you that we cannot provide you with a subscription to our cryptocurrency publications. This is because it suggests that an investment in cryptoassets may not be suitable for you, and you may not be in a position to bear the potential adverse financial outcomes associated with investing in cryptocurrencies.
Where can I get more information about risks?
First, note that due to the potential for losses, the Financial Conduct Authority (FCA) considers investing in cryptoassets to be high risk.
What are the key risks?
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) does not protect investment in cryptoassets 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 investing in cryptoassets. 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 any one to do well.
A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Learn more here.
If you are interested in learning more about how to protect yourself, visit the FCA’s website here.
For further information about cryptoassets, visit the FCA’s website here.