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. Take 2 mins to learn more.

    Risk Summary - Meme Coins

    Estimated reading time: 2 min

    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. Specific risks associated with meme coins

    ‘Meme coins’ (e.g. DOGE, SHIB, PEPE) are crypto-assets whose value is driven primarily by community interest and online trends.

    Meme coins carry the following risks:

    • Volatility risk: Meme coins can have extreme price volatility, often experiencing rapid and unpredictable price fluctuations within short periods. The value of meme coins can be influenced by social media trends, celebrity endorsements, and other factors unrelated to traditional investment fundamentals.

    • Lack of utility: Meme coins often lack intrinsic value or utility, being primarily driven by community interest, online trends, and speculative trading.

    • Market manipulation: Meme coins may be susceptible to increased risk of market manipulation including ‘pump-and-dump’ schemes, where the price is artificially inflated followed by a sudden crash.

    • Lack of transparency: Meme coins may have limited available information about their development teams, goals, and financials. This lack of transparency can make it challenging to assess the credibility and potential of a meme coin accurately.

    • Emotional investing: Meme coins often garner strong emotional reactions from investors, leading to impulsive decisions. Emotional trading activity can amplify losses.

    3. 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 here.

    • The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm. Learn more about FOS protection here.

    4. 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.

    5. 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.

    6. 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.

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

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

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

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