BITCOIN'S price surge has attracted more investors to plough cash into cryptocurrencies
and Initial Coin Offerings (ICOS), but the financial regulator is now highlighting the fraud and scam risks to investors.
The price of bitcoin has jumped from around $600 to almost $5,000 in the space of 12 months.
The huge rise in value has also led to higher prices in rival digital currencies such as ethereum - and also fuelled the popularity of ICOs.
But the Financial Conduct Authority (FCA) is now warning that ICOs are very high risk and speculative investments - and in some cases are a scam.
And anyone who puts their cash into the digital projects should be prepared to lose their entire stake.
The so-called token or coin sales are typically pitched as a way of raising funds for projects using cryptocurrency.
The huge rise in value has also led to higher prices in rival digital currencies such as ethereum - and also fuelled the popularity of ICOs.
But the Financial Conduct Authority (FCA) is now warning that ICOs are very high risk and speculative investments - and in some cases are a scam.
And anyone who puts their cash into the digital projects should be prepared to lose their entire stake.
The so-called token or coin sales are typically pitched as a way of raising funds for projects using cryptocurrency.
ICO issuers accept bitcoin or ethereal in exchange for
coins or tokens related to the firm or project raising funds.
The coin could be a share in the company or a voucher for future services.
In some cases it is hard to decipher the value of the coins, according to the FCA.
And there is the possibility that the ICO is a fraud simply designed to trick people out of money.
The watchdog added that even in genuine cases tokens
are typically for projects in the very early stages of development - investors face high risks by getting involved.
Therefore, ICO investment should only be contemplated by experienced investors who are confident in the project raising funds, the FCA said.
coins or tokens related to the firm or project raising funds.
The coin could be a share in the company or a voucher for future services.
In some cases it is hard to decipher the value of the coins, according to the FCA.
And there is the possibility that the ICO is a fraud simply designed to trick people out of money.
The watchdog added that even in genuine cases tokens
are typically for projects in the very early stages of development - investors face high risks by getting involved.
Therefore, ICO investment should only be contemplated by experienced investors who are confident in the project raising funds, the FCA said.
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