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New meme token Pepecoin was launched last monthInstagram Investors have rushed to buy large amounts of Pepe after it was issued on the Ethereum blockchain in April. But experts have warned the fad could end quickly and badly, especially as cryptocurrencies are extremely volatile and can be incredibly risky to invest in. Unlike other types of investment, crypto is not regulated so you don’t have protection if things go wrong. For now, Pepecoin is claimed to be making tidy sums for those undeterred by warnings. One trader who goes by the name dimethyltryptamine.eth spent £208 on trillions of tokens three weeks ago. According to the user, they have already made £3 million from tokens they have sold, reports Coin Desk, while their remaining holdings are worth around £7 million. The coin is based on the “Pepe the Frog” meme, a cartoon character created by Matt Furie. But experts have raised concerns over the concentrated ownership of Pepecoin, with the bulk of tokens held by just a handful of traders. A sudden sale by one of the top holders could see prices impacted immediately. Another major concern for any considering crypto is there’s no guarantee you’ll be able to convert your assets back to cash when you need to. Fees and charges for buying and selling can also be much higher than with other investments. But new proposals by the government could give Brits investing in cryptocurrency extra protection. Ministers are looking to regulate the cryptocurrency sector to help consumers avoid risks. Cryptoassets – known as “crypto” – are relatively new, diverse and constantly evolving assets that have a range of potential benefits, as well as risks. In the year to December 2022, reported losses in crypto scams rose by 72 per cent – resulting in £329million lost, according to Action Fraud Five risks of crypto investments BELOW we round up five risks of investing in cryptocurrencies. - Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
Source: https://www.thesun.co.uk/news/22295155/ ... -warnings/