Andrew Bailey: Bitcoin investors should be prepared to lose all their money

 

Lucy White

I cover private equity, asset management and financial regulation for City A.M. [..] Show more
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Bitcoin can now be converted to cash at ATMs (Source: Getty)

The chief executive of the Financial Conduct Authority (FCA) has tonight issued a stark warning about the cryptocurrency bitcoin.

Speaking on the BBC‘s Newsnight, Andrew Bailey said: “If you want to invest in bitcoin, be prepared to lose all your money.”

He noted that the FCA did not regulate bitcoin, just the financial instruments it refers to, as it is technically a commodity rather than a fiat currency backed by a central bank.

Read more: Bitcoin futures soar above $18,000 on Cboe market debut

However, despite raising concerns over the cryptocurrency’s lack of transparency and pricing volatility, Bailey added: “I don’t think bitcoin is prevalent enough to be a systemic threat.”

The interview with Bailey comes after the Chicago Board Options Exchange (CBOE) this week allowed the trading of bitcoin futures.

Ed Tilly, the chief executive of CBOE, told the BBC: “We’re not endorsing bitcoin, but what we wanted to do was bring transparency to an industry where there was interest.”

Read more: Bitcoin price rocketing is spurring people to mortgage their home to buy cryptocurrency

The price of the cryptocurrency, which is based on blockchain technology allowing its ownership to remain totally anonymous, has rocketed more than 1,000 per cent this year.

But experts have expressed worries over the fact that there are a finite number of bitcoins to be “mined”, and that the coins are not connected to any tangible commodity.

Read more: Bitcoin exchange warns customers of system collapse if prices crash

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