Cryptocurrency CFD Trading: Consumers Warned Over High 'Investing Risks

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  Investing #​RegulationNOV 15, 2017 @ 01:02 PM10,060
  Cryptocurrency CFD Trading: Consumers Warned Over High 'Investing Risks'

Roger Aitken , CONTRIBUTOR

British financial regulator, the Financial Conduct Authority (FCA), has issued a warning to consumers over what it has described as the “extremely high-risk” of buying Contracts for Differences (CFDs), speculative products that include financial spread bets, with cryptocurrencies like Bitcoin as the underlying investment that increasingly are being marketed to consumers.

The notice comes two months after the UK regulator issued a statement and consumer warning about the risks of Initial Coin Offerings (‘ICOs’). In a similar vein to the message earlier this week issued by the European Securities & Market Authority (ESMA), an EU financial regulator based in Paris, the FCA stated this September that ICOs are “very high-risk, speculative investments.
Cryptocurrency CFDs allow investors to speculate on a change in price of a cryptocurrency such as Bitcoin or Ethereum and use leverage.

The FCA expressed concern over the price volatility and value of cryptocurrencies, and therefore the value of CFDs, complex financial instruments that allow speculation on the price of an asset, linked to them. As such they are “vulnerable to sharp changes in price” due to unexpected events or changes in market sentiment, it stated. A case in point cited was the 30% decline in the price of Bitcoin late last weeky