Cryptocurrency CFD Warning
The UK Financial Conduct Authority (FCA) has recently issued a consumer warning about contracts for differences (CFDs), including financial spread bets, with cryptocurrencies as the underlying investment.
CFDs are complex financial instruments which allow speculation on the price of an asset. CFDs are typically offered with leverage which means a consumer only need to put down a portion of the investment’s total value. However leverage also multiplies the impact of price changes on both profits and losses. Cryptocurrency CFDs allow investors to speculate on a change in price of a cryptocurrency such as Bitcoin or Ethereum. They have experienced significant price volatility in the past year which, in combination with leverage, places consumers at risk of suffering significant losses.