Risk disclosure: what could go wrong when you buy Bitcoin

Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong.

Risk summary: take 2 minutes to read this

Estimated reading time: 2 min. The five headings are the ones the Financial Conduct Authority sets for its risk summary for cryptoassets. The words under them are a plain-English version written for this page.

You could lose all the money you invest

The price of Bitcoin can fall as quickly as it rises, and the falls can be large. Be prepared to lose everything you put in. Money or Bitcoin can also be lost through cyber-attacks, financial crime or the failure of a firm, including CoinCorner.

You should not expect to be protected if something goes wrong

The Financial Services Compensation Scheme does not protect Bitcoin bought or held with CoinCorner. The Financial Ombudsman Service will not be able to consider complaints about CoinCorner's Bitcoin services. The complaints page explains how to complain and which routes exist.

You may not be able to sell your investment when you want to

Nobody can promise that Bitcoin can be sold at a given moment or at a given price. That depends on supply and demand at the time. Technology outages, cyber-attacks and other operational failures can also delay a sale or a withdrawal.

Cryptoasset investments can be complex

Bitcoin can be hard to understand, which makes its risks hard to judge. Do your own research before you buy. If an offer sounds too good to be true, it probably is.

Don't put all your eggs in one basket

Putting all your money into one type of investment is risky. Spreading it across different investments makes you less dependent on any one of them. The FCA's rule of thumb is not to put more than 10% of your money into high-risk investments.

Headings and the 10% rule of thumb: FCA Handbook, COBS 4 Annex 1R, risk summary for qualifying cryptoassets.

Risks by product

Buying and holding Bitcoin

The pound value of your Bitcoin changes all the time, and you may get back less than you paid. Bitcoin transactions cannot be reversed: a payment to a wrong address, or one a fraudster talked you into, is gone. While Bitcoin sits in your account CoinCorner holds the keys, so you depend on the company. It says customer assets are held in full reserve, but it publishes no proof-of-reserves report, audit or attestation.

Vault custody

Vault keys are held by CoinCorner and by AnchorWatch, so you depend on both. The insurance is a commercial policy, not a compensation scheme. It is subject to terms, limits and exclusions, it typically starts on the first day of the calendar month after your transfer, and Bitcoin is not covered before then. The policy limit is not published. The 1.50% annual fee is charged whatever the price does. Read the Vault insurance terms first.

Lightning payments, the Bolt Card and Send Globally

Lightning payments usually settle within seconds and cannot be recalled. If a Bolt Card is lost or stolen, the balance linked to it may be at risk until the card is blocked. With Send Globally your pounds or euros are converted to Bitcoin and paid out in local currency by a third-party partner: the amount that arrives depends on rates at the time, the partner may add a fee, and a payout can be delayed or refused at the partner's end.

Checkout for businesses

Checkout converts each payment to pounds or euros straight away, so the business does not carry the Bitcoin price after the sale. Bitcoin payments have no chargebacks, which also means a refund is a new payment the business has to send, and the price may have moved since the sale.

Pound and euro balances

Pound and euro balances are electronic money issued by Mercury Foreign Exchange Limited, which is authorised by the FCA under the Electronic Money Regulations 2011 (FRN 900858). The money is held in segregated accounts and safeguarded. Safeguarding is not deposit protection: e-money is not covered by the Financial Services Compensation Scheme.

What protection does not apply

CoinCorner states that it and investments in cryptoassets “are not regulated by the Financial Conduct Authority, are not covered by the Financial Ombudsman Service, and are not subject to protection under the Financial Services Compensation Scheme”. The summary of the terms of use shows that the terms go further: they say the virtual asset services and the fiat currency wallet are not regulated by the Isle of Man Financial Services Authority, the FCA or any other regulator.

CoinCorner Ltd is registered with the Isle of Man Financial Services Authority (register entry) as a designated business. The regulator's own description is that designated businesses are “registered and overseen by the Authority for AML/CFT compliance only”. That means checks against money laundering and terrorist financing, not supervision of how your Bitcoin is held. The page on registrations and what they cover has the detail.

Scams and security

Fraudsters use the names of real Bitcoin companies. The FCA suggests three questions before you send money anywhere. Were you contacted out of the blue? Are you being pressured to act quickly? Are you being promised returns that sound unrealistic? A yes to any of them is a reason to stop. The FCA's page on crypto investment scams explains what to do next, and the security page explains how Bitcoin and accounts are protected.

Not investment advice

Everything on this site is for information only. It is not investment advice and not a personal recommendation. If you are unsure whether Bitcoin is right for you, speak to an independent financial adviser. For the wider picture, read how Bitcoin is regulated in the UK.