Cryptocurrency is often presented as the next big opportunity in investing. Stories of overnight fortunes and eye-catching returns can be tempting, especially when online platforms make buying crypto as easy as a few taps on your phone.
At Flying Colours Advice, we do not recommend cryptocurrency as part of a long-term investment strategy. It is currently unregulated and a speculative, high-risk asset that lacks the evidence and stability needed for building lasting wealth. However, we also know that many investors are curious about it, which is why we want to explore the facts here, so you can avoid potentially costly mistakes.
What is cryptocurrency and why is it risky for investors?
Cryptocurrency is a form of digital asset powered by blockchain technology. It is not backed by a central authority (such as a government or central bank) and it does not produce income like interest or dividends. Its value comes entirely from what others are willing to pay for it at any given moment.
The main risks of investing in cryptocurrency
- High volatility: Prices can rise and fall by double-digit percentages in a single day.
- No intrinsic value or income: There are no underlying earnings or assets to support its price.
- Lack of regulation: The UK is only developing a full regulatory plan at this stage.
- Scams and fraud: The market attracts criminals who exploit its complexity and anonymity.
- Hype-driven decisions: Social media and influencer promotion can fuel speculative bubbles.
These risks are then further amplified on unregulated platforms, where investor protections do not apply.
The FCA’s role in regulating crypto investments in the UK
The Financial Conduct Authority (FCA) is the UK’s financial regulator. It protects consumers, ensures markets operate with integrity, and supervises the conduct of thousands of financial firms. The FCA does not fully regulate cryptocurrency but is actively working on establishing a regulated framework in the UK. In recent years the FCA has taken steps to bring cryptocurrency promotions under stricter oversight in the UK.
Key FCA rules designed to protect UK crypto investors:
• Only allowing crypto firms registered with the FCA to promote (advertise) to UK consumers.
• Introducing a 24-hour “cooling-off” period for first-time crypto investors.
• Requiring clear and prominent risk warnings in all marketing materials.
Further proposals aim to strengthen these protections, potentially bringing crypto advertising rules in line with other high-risk investments under UK law.
These measures help reduce misleading promotions and ensure investors see risk information up front. However, regulation cannot remove the core risks of cryptocurrency, which remains speculative, volatile, and unproven as a store of value. In addition, some firms may not be FCA registered and therefore not obliged to follow the advertising rules.
A real-world warning: The UK DN Miner scam
In May 2025, the FCA issued a warning about DN Miner, an overseas clone firm posing as an FCA-authorised company. The scammers falsely claimed an affiliation with Flying Colours Investment Management Limited, copying contact details and branding to mislead consumers.
When investors attempted to withdraw funds, their accounts were frozen and the operators disappeared. Because DN Miner is not a UK firm and not genuinely FCA-registered, victims were not eligible for compensation through the Financial Services Compensation Scheme (FSCS) or support from the Financial Ombudsman Service.
This case is a reminder of why it is essential to check that any platform is FCA-registered before considering investing in cryptocurrency, and it illustrates how far fraudsters will go to exploit interest in this high-risk investment.
Flying Colours’ investment perspective on crypto
We believe that a well-diversified portfolio built on evidence-backed investments, such as equities, bonds and other regulated asset classes, is the most reliable way to achieve your financial goals. Cryptocurrency does not fit within this framework as:
- It has no intrinsic value.
- It has no long-term track record as a wealth-building tool.
- It is too volatile to form part of a disciplined investment plan.
- There is currently no investor protection in the UK, even with some increased regulation.
If you do choose to invest in cryptocurrency, it should be with money you can afford to lose entirely, and never as the foundation of your portfolio.
Focus on proven investments strategies that work
It’s easy to be drawn in by the headlines and hype, but the path to sustainable financial success is built on patience, discipline, and a strategy backed by evidence. If you are considering crypto, make sure it’s within the context of a broader, regulated investment plan that’s designed for your goals.
Book a free financial planning consultation with a Flying Colours Advice financial adviser today to ensure your investments are working towards long-term success, not chasing short-term speculation or putting yourself at risk of a scam.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term (minimum of 5 years) and should fit in with your overall risk profile and financial circumstances.