Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong.

Cryptoasset trading: is it right for me?

Like any form of trading, cryptoassets have a number of benefits, but trading in cryptoassets also carries risk. It’s important that you educate yourself and understand what those risks are to determine if you’re comfortable to start trading cryptoassets.

We will treat all assets traded on the OANDA Crypto platform as if they are included in the Financial Conduct Authority (FCA) definition of cryptoassets. Please take a few minutes to read the FCA’s summary of the risks related to cryptoasset trading.

Risk summary for qualifying cryptoassets
Estimated reading time: two minutes

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this type of 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.

Here are a few additional considerations around cryptoasset trading.

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Market volatility

Changes to cryptoasset market sentiment are very hard to predict, and they can lead to sudden and substantial moves in price. A rapid drop one day can be reversed the very next – and vice versa. 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 be prepared to lose any money that you invest in cryptoassets.

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Scams and hacks

Bad actors are a constant threat to many types of financial transaction, and this is unfortunately also true of cryptoasset trading. Standards of security are highly variable – newer coins, for example, may carry a higher scam risk than more established tokens. Once again, it’s important to remember that there is no protection for cryptoassets so if they’re lost as the result of a scam or a hack, you won’t be able to recover your lost cryptoassets.

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The bottom line

When trading cryptoassets – as with any form of trading – education is crucial. It’s a new and highly volatile class of asset with the potential for both great returns and significant losses, so you need to make sure that you understand the risks before investing. Understand that you could lose your entire investment, so only trade with money you can afford to lose.

It’s a challenge, for sure – but an exciting one. If you think that cryptoasset trading is the perfect fit for you, we’re here to get you started.