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Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment 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) 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 any one to do well.
- A good rule of thumb is not to invest more than 10% of your money in high-risk investments. 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.
Not all cryptoassets bear the same risks:
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.
Please learn about the types of cryptoassets and their associated risks
Financial Promotion approved by: Archax Limited. Date: 22/03/2024
Additional Risks
1.1 Risks.
In addition to the risk disclosures found here, you acknowledge and agree that there are additional risks associated with the purchase, sale, storage, and transfer of digital assets may cause you to incur financial losses, including but not limited to, the following:
(a) we could be impacted by one or more regulatory inquiries or regulatory action, which could impede or limit the ability of us to continue to develop, or which could impede or limit your ability to use the payment services;
(b) cryptography is a new and evolving field and technical advances such as the development of quantum computes may present risks to digital assets, which could result in the theft or loss of your digital assets;
(c) in the event of a fork or a network disruption, transactions may not be completed, or they may be completed partially, incorrectly completed, or substantially delayed;
(d) your digital assets or data may be stolen, copied, or accessed without your authorization;
(e) any digital asset may be compromised or cease to operate as intended due to technological failure, technological progression, changes to applicable laws or third-party attacks;
(f) digital asset values are highly volatile and any digital asset may lose some or all of its value due to market volatility, lack of demand, market manipulation, government regulation, or any reason described in these terms; and
(g) information or instructions transmitted over the Internet may be delayed, interrupted, stolen, or altered due to software or hardware malfunction or third-party hacks. You assume full responsibility and agree that we will not have any responsibility or liability for any losses or other harm you may incur in connection with any or all such risks.
You acknowledge that using digital assets and blockchain-based solutions, networks and protocols may involve serious risks. It is your duty to learn about all these risks. We have no responsibility to alert you of all these risks. We have no control over, and makes no representations regarding the value of digital assets, or the security, functionality or availability of their networks or protocols. We do not own or control the underlying software protocols which govern the operation of digital assets. digital asset protocols are subject to changes in protocol rules which may materially affect the value, function, or name of the digital asset.