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Due to the potential for losses, the Financial Conduct Authority (FCA) and the product manufacturer, 21Shares AG, consider 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 here. [https://www.fscs.org.uk/check/investment-protection-checker/]
  • [The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm] or [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 here. [https://www.financial-ombudsman.org.uk/consumers]
  • For investors outside of the UK, 21shares cryptoasset products are not protected by any other investor compensation or guarantee scheme.

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 commingling 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.

A good rule of thumb is not to invest more than 10% of your money in high-risk investments. [https://www.fca.org.uk/investsmart/5-questions-ask-you-invest]

Additional product-specific risks

These products are backed by cryptoassets that serve as collateral. The value of your investment depends on the value and recoverability of those cryptoassets, and on how closely the product tracks their price. If the underlying cryptoassets cannot be recovered, or are worth less than expected, you could lose some or all of your money.

‍You could lose money if the collateral:

  • Drops in value or becomes hard to sell because of market volatility or a lack of buyers.
  • Becomes inaccessible if a custodian, broker, or other third party that holds or manages the cryptoassets fails, is hacked or experiences major technical problems.
  • Is stolen or lost through fraud, cyber-attacks, or blockchain failures that prevent recovery.
  • Is used for staking to earn rewards on blockchain networks. Staked cryptoassets can be locked for periods and may be lost if the network or provider fails, is hacked or penalised (“slashing”), delaying or reducing what you get back.
  • Cannot be replaced or recovered — the issuer is not responsible for replacing missing cryptoassets, so you may not receive the full value of your investment.

‍In addition, the underlying cryptoasset collateral could be affected by:

  • Operational and technology risks: These products depend on other firms, such as custodians and trading partners. If one of these firms fails, is hacked or suffers a major system issue, the cryptoassets backing your investment could be lost or frozen.‍
  • Product change or early redemption risks: The issuer can change product terms or end the product early, even in poor market conditions. This could affect its value, and you may get back less than you invested.