FCA raises the alarm over crypto bets frenzy

The City watchdog has sounded the alarm over crypto-currencies just a day after the Bank of England announced plans to create a digital coin.

Financial Conduct Authority chief Nikhil Rathi told investors – particularly the young – to avoid the crypto craze amid the soaring popularity of the likes of bitcoin.

In a speech at UK FinTech Week, he said: ‘We have made clear our concerns about certain investments in crypto-assets. 

High risk: Financial Conduct Authority chief Nikhil Rathi told investors – particularly the young – to avoid the crypto craze amid the soaring popularity of the likes of bitcoin

‘Direct investment in crypto-assets are high risk, with few regulatory protections. We have been blunt. If you invest, you should be able to afford to lose it all.’

The Treasury and the Bank of England this week announced a task force to weigh up the idea of launching a central bank digital currency – or CBDC – dubbed ‘Britcoin’ by Chancellor Rishi Sunak.

While the currency will be pegged to the pound and therefore be less volatile than bitcoin, the move lends legitimacy to an industry that has yet to be proven as an asset class.

Last week Coinbase undertook a spectacular float in New York as cryptos like bitcoin and ethereum increasingly become more mainstream. 

The digital currency exchange floated with a mammoth £81billion valuation on the Nasdaq, giving it a larger market cap than some of the world’s biggest banks.