LogoLogo
X👾💡🎒
Support Docs
  • Support Docs
  • Technical Docs
  • API Docs
Support Docs
  • Start Here
    • Downloads
  • Exchange
    • Account Functions
      • Change Email
      • Take Profit & Stop Loss Orders (TP/SL)
      • Export trading history (CSV)
      • Order types and executions
      • Generate API keys for Backpack Exchange
    • Identity Verification
      • KYC Identity Verification is pending
      • How To Verify Account Identity
        • Create a new account
        • Verify Identity (KYC)
      • Supported Regions
    • Deposits and Withdrawals
      • Crypto
        • How to Deposit
        • How to Withdraw
        • Deposit & Withdrawal Issues
        • Withdrawal Fees
      • Fiat
        • How to Deposit via Wire
        • How to Withdraw via Wire
        • FAQs
          • Deposit
          • Withdraw
        • Bank Guides
          • Chase
            • How to Deposit via Wire Transfer — Chase Bank
          • ZA Bank
            • How to Deposit via Wire Transfer — ZA Bank
            • How to Withdraw via Wire Transfer — ZA Bank
    • Login and Security
      • Account Identity Requirements
      • Reset Password
      • OTP Passcode
      • Reset 2FA
      • I suspect unauthorized access to my account
      • Troubleshoot connectivity issues
    • Product FAQs
      • Spot Trading FAQs
      • Lend/Borrow FAQs
    • Programs
      • Points
      • Referrals
      • Affiliate Program
        • Flexible Commission Sharing
      • VIP
      • Market Maker Program
      • Token Listing Application
      • Bug Bounty Program
    • Trading Fees
    • API & Developer Docs
      • API Clients
      • Backpack Exchange Python API guide
  • Wallet
    • What is Backpack Wallet?
    • Get Started
      • Supported Browsers and Platforms
      • Import/Recover Wallet
    • Actions
      • Swap Tokens
      • How to Buy and Sell Crypto with MoonPay
        • Buy Crypto in Backpack Wallet with MoonPay
        • Sell Crypto in Backpack Wallet with MoonPay
      • Refer, Swap & Earn
      • Stake SOL
      • SOL/ETH Bridge
      • Secure NFTs
      • Add Networks
      • Connect Hardware Wallet
      • Multisig
      • Custom RPC Addresses
      • Add Developer Testnets
      • Collaboration Application Form
    • Troubleshoot
      • Hide Spam NFTs
      • Hide Tokens
      • Wallet Not Loading
      • View Secret Recovery Phrases and Private Keys
    • Technical Docs
      • Deeplinks
        • Provider Methods
          • Connect
          • Disconnect
          • SignAndSendTransaction
          • SignAllTransactions
          • SignTransaction
          • SignMessage
        • Other Methods
          • Browse
        • Handling Sessions
        • Specifying Redirects
        • Encryption
        • Limitations
  • Report Issue or Bug
    • Exchange
    • Wallet
  • Legal
    • General Legal
      • User Agreement
      • Privacy Policy
      • Cookie Policy
    • VARA Disclosures
      • Virtual Asset Standards
      • VARA License Information
      • Risk Disclosures
      • Price Quotes
      • Exchange Trading Rules
      • Complaints
      • Available Digital Assets
    • UK Crypto Regulations & Risk Disclosure
    • Backpack Wallet
      • Terms and Conditions
      • Privacy Notice
Powered by GitBook

@ 2025 Backpack Exchange

On this page
  • New UK Crypto Regulations
  • Notice to customers in the UK
  • What are the key risks?
  • 1. You could lose all the money you invest
  • 2. You should not expect to be protected if something goes wrong
  • 3. You may not be able to sell your investment when you want to
  • 4. Cryptoasset investments can be complex
  • 5. Don’t put all your eggs in one basket
  • The risks of different cryptoasset products
  • Notice to customers in the UK
Export as PDF
  1. Legal

UK Crypto Regulations & Risk Disclosure

PreviousAvailable Digital AssetsNextBackpack Wallet

Last updated 2 months ago

New UK Crypto Regulations

The UK financial regulator, the Financial Conduct Authority (‘FCA’), has expanded the scope of the financial promotions regime to enhance protections for UK users investing in cryptoassets. All cryptoasset firms - like Backpack Exchange - who market to UK consumers will have to comply with the new rules from 8 October 2023.

Notice to customers in the UK

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

1. 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.

2. 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 .

  • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection .

3. 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.

4. 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.

5. 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.

The risks of different cryptoasset products

Not all cryptoassets are the same. Before making an investment decision, it's essential to be aware of the unique risks associated with each type of cryptoasset products.

Notice to customers in the UK

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

------

Stablecoin Risks. Stablecoins are often backed by reserves including fiat currencies, short term government and other bonds, as well as other assets. However, they are generally not subject to any form of deposit or government insurance. For some stablecoins, the underlying reserves may not be audited, and the types of reserves backing the stablecoin is unable to be confirmed. As a result, in addition to fees charged by the issuers, users and investors may face difficulties redeeming stablecoins for their underlying assets. In addition, if the collateral loses value, or are seen as unstable, non-redeemable, or not otherwise protected, whether in actuality or in perception, then the stablecoin may destabilize, resulting in a loss of the peg. The security and operational integrity of the custody and mint and redemption platforms associated with stablecoins are also critical. Any breach or failure can result in significant losses to stablecoin holders. Stablecoin issuers and operators also navigate complex and evolving regulatory landscapes across jurisdictions. Failure to comply with these financial laws and regulations can result in fines, restrictions or the shutdown of operations, affecting the value and liquidity of the stablecoin.

Memecoin Risks. Memecoins often rely on social media buzz, hype and endorsements from influencers and opinion leaders for their valuation. Any negative shift in sentiment or fading interest can rapidly cause their value to depreciate, including to zero in a short amount of time. In addition, unlike traditional assets or some crypto assets with utility or underlying projects, meme coins often lack intrinsic value, making their long-term viability and price stability highly uncertain. In addition, the memecoins are susceptible to manipulation through pump-and-dump schemes, where prices are artificially inflated to attract buyers before the assets are sold off, leading to a sharp decline in value. Many meme coins are also launched with minimal planning or long-term vision, and the risk of developers abandoning the project is significant. The success of certain meme coins has led to a proliferation of similar tokens, many of which are created solely to scam unwary investors. Distinguishing legitimate projects from scams in a hype-driven market can be highly challenging.

A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Learn more .

If you are interested in learning more about how to protect yourself, visit the FCA’s website .

For further information about cryptoassets, visit the FCA’s website .

here
here
here
here
here