Cryptocurrencies and consumer protection: caveat emptor

Abstract

Cryptocurrencies have had a volatile existence since the creation of Bitcoin in 2008 by the pseudonymous Satoshi Nakamoto. The shroud of mystery around the identity of Nakamoto, the stories of early adopters making mammoth gains on their initial holdings, and the counterculture nature of cryptocurrencies have contributed to attracting consumers into investing in both Bitcoin and the thousands of other cryptocurrencies. The level of protection afforded to consumers in most circumstances has generally increased, however, cryptocurrencies are an anomaly because consumers are seen to be vulnerable to a myriad of frauds. The fraud threats posed by cryptocurrencies, and the reaction of the Financial Conduct Authority (FCA) will be appraised, drawing the conclusion that consumers are poorly protected in cryptocurrency markets and warnings from relevant authorities amount to little more than the age-old principle of caveat emptor