Before You Invest
Cryptoassets are high-risk investments. Their value can rise or fall rapidly, and you could lose some or all of the money you invest.
Before buying, selling, or holding cryptoassets, make sure you understand the risks involved. This guide explains the most common risks, but it does not cover every possible scenario.
Important: Mercuryo does not provide investment advice. You should always do your own research before investing in any cryptoasset.
How Much Should I Invest?
As a general guideline, you should not invest more than 10% of your net assets in high-risk investments.
High-risk investments include:
- Cryptoassets (such as Bitcoin)
- Meme coins
- Stablecoins
- Peer-to-peer (P2P) lending
- Investment crowdfunding
- Unlisted company shares or debt
- Long-term asset funds
For this guidance:
Net assets do not include:
- Your primary residence
- Pension savings
- One-off pension withdrawals
- Rights under qualifying insurance contracts
Diversifying your investments can reduce your exposure to the performance of a single asset.
What Are the Main Risks of Cryptoassets?
Market Volatility
Cryptoasset prices can change dramatically within a short period.
You may lose part or all of your investment, and there is no guarantee prices will recover.
No Guaranteed Returns
Past performance does not predict future results.
Investing based on market hype, fear of missing out (FOMO), or social media trends can lead to significant losses.
Regulatory Risk
Cryptoasset regulations vary between countries and may change over time.
Changes in laws or regulations may affect:
- The value of cryptoassets
- Their availability
- How they can be traded or used
Mercuryo is registered or licensed only in the jurisdictions listed on our website.
Mercuryo does not provide investment advice.
Investor Protection
Cryptoassets held with Mercuryo are not protected by investor compensation schemes or UK financial protection schemes.
If Mercuryo were to become insolvent, you may not recover all assets held in your Mercuryo wallet.
Tax Responsibilities
Profits from cryptoassets may be subject to tax, including capital gains tax, depending on your country of residence.
You are responsible for understanding and meeting your own tax obligations.
Security & Operational Risks
Although Mercuryo invests heavily in platform security, no platform can eliminate all risk.
Possible risks include:
- Cyber attacks
- Technical failures
- Service interruptions
- Temporary inability to access your assets
Risks by Cryptoasset Type
Meme Coins
Meme coins are among the highest-risk cryptoassets.
Their prices are often driven by:
- Social media trends
- Community hype
- Influencer promotion
- Speculation
Many meme coins have little or no underlying utility or intrinsic value.
Additional risks include:
- Extreme price volatility
- Pump-and-dump schemes
- Market manipulation
- High likelihood of rapid losses
Stablecoins
Stablecoins aim to maintain a stable value by being linked to traditional currencies or other assets.
However, stability is not guaranteed.
Risks include:
- Losing their peg to the underlying currency
- Reserve management failures
- Liquidity shortages
- Reduced confidence leading to redemption issues
- Exchange rate fluctuations affecting the underlying currency
Wrapped Tokens
Wrapped tokens represent another cryptocurrency on a different blockchain.
They rely on:
- Smart contracts
- Custodians that hold the underlying asset
Risks include:
- Smart contract vulnerabilities
- Custodian failure
- Counterparty risk
- Liquidity issues
- Price differences between the wrapped token and the underlying asset
Decentralised Finance (DeFi) Tokens
DeFi projects operate using smart contracts instead of traditional financial intermediaries.
Risks include:
- Smart contract vulnerabilities
- Fraudulent projects and scams
- Rug pulls (where project creators abandon a project after taking investors' funds)
- Regulatory uncertainty
- Irreversible transactions
- High technical complexity
Sending crypto to the wrong wallet address cannot usually be reversed.
Exchange Risks
Mercuryo provides services for buying, selling, exchanging, and storing supported cryptoassets.
Mercuryo cannot guarantee:
- The future value of any cryptocurrency
- Investment performance
- Protection from market losses
You are responsible for the investment decisions you make.
Frequently Asked Questions
Does Mercuryo provide investment advice?
No. Mercuryo does not provide financial or investment advice.
Can I lose money investing in crypto?
Yes. Cryptoassets are high-risk investments, and you may lose some or all of your investment.
Are my cryptoassets protected by investor compensation schemes?
No. Cryptoassets held with Mercuryo are not covered by investor compensation or deposit protection schemes.
Can Mercuryo reimburse losses caused by market price changes?
No. Mercuryo is not responsible for losses resulting from market volatility or changes in the value of cryptoassets.
Is investing in meme coins riskier than other cryptocurrencies?
Generally, yes. Meme coins tend to be significantly more volatile and are often driven by speculation rather than underlying utility.
Should I research a cryptoasset before investing?
Yes. You should always conduct your own research and understand the risks before investing in any cryptocurrency.
Remember
Cryptoassets can offer opportunities, but they also carry significant risks.
Only invest money you can afford to lose, diversify where appropriate, and make sure you understand the asset before investing.
