Why are there special requirements for UK residents?

The verification requirements are in line with the new regulatory framework and rules imposed by the UK’s Financial Conduct Authority (FCA), designed to make sure that the investors are properly aware of the risks involved and have sufficient knowledge and understanding about investing in cryptoassets.

The UK’s Financial Conduct Authority has implemented new rules to strengthen financial promotions of investments in cryptoassets. From January 8, 2024, Qovex and other cryptoasset services firms in the UK are required to assess the appropriateness of their customers for investments in cryptoassets, categorize their customers according to one of the two investor profiles and implement a cooling off period.

What is the FCA?

The FCA is a regulatory body which regulates firms providing financial services to consumers in the UK and maintains the integrity of the financial markets in the UK.

Why do I have to do the appropriateness test and investor profile categorization?

The appropriateness test and investor profile categorization are part of the new regulatory framework introduced by the UK’s Financial Conduct Authority (FCA), designed to make sure that the investors can demonstrate they are aware of the risks involved and have sufficient knowledge and understanding of investing in cryptoassets.

Why can't I retake the appropriateness test immediately?

You can retake it immediately, but only once. After the second or any following attempt, you must wait for 24 hours before trying again.

Why do I have to categorize my investor profile?

This is another feature of the new rules introduced by the UK’s Financial Conduct Authority (FCA), designed to ensure that promotions of investments in crypto assets are only made available to certain investor profiles considered appropriate to be aware of and understand the risks related to cryptoasset investing and trading.

As a restricted investor, how should I estimate the percentage of the net assets that I plan to invest in the next 12 months, if I am not sure?

Although the future remains uncertain for all of us, please try to estimate the highest percentage of your net assets that you can envision potentially investing in the next 12 months, considering the present circumstances.

As a high-net investor, why do you need my annual income and/or net assets?

We are required to make sure that our services are only made available to certain investor types that are deemed appropriate to be aware of and understand the risks related to cryptoasset investing and trading. For a self-declared high-net worth investor, your annual income in the last financial year should be above £100,000 and/or you should have net assets of over £250,000.

What if I don't fit in any of the available categories?

While most of our users should fall into one of the categories provided, if you do not, we regret to inform you that we cannot provide you with our services. This is because it suggests that an investment in cryptoassets may not be suitable for you, and you may not be in a position to bear the potential adverse financial outcomes associated with cryptoasset investments.

Why are some of my features blocked after I’m verified?

Deposits and trading are disabled until 24 hours have passed since registration. This is a feature of the new rules introduced by the UK's Financial Conduct Authority (FCA). These rules are designed to ensure that investors aren’t under any time pressure when making investment decisions related to high-risk investments, like crypto assets. We’ll notify you when this cool-off period has passed, and you can start trading. Please note that trading will remain blocked if you have not yet passed the appropriateness test.

How am I protected from risks?

Please be aware that you have been informed about the associated risks, but you should not expect protection 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 framework. In other words, this type of investment isn’t recognized as the sort of investment that the FSCS can protect. Learn more by using the FSCS investment protection checker

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

Where can I get more information about risks?

First, note that 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. 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.

3. You may not be able to sell your investment when you want to

• There is no guarantee that investments in cryptoassets and stablecoins can be easily sold at any given time. The ability to sell a cryptoasset or stablecoin 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 and stablecoins 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. Stablecoins are not always stable

• Stablecoins aim to maintain a stable value linked to another currency, but they are not immune to price fluctuations, and there is no certainty that their value will remain stable or pegged 1:1 to the other currency.

6. The stability of asset-backed tokens is not based only on the underlying asset

• The value of asset-backed tokens is subject to fluctuations in the market of the underlying asset (e.g. gold), however, the stability of the asset-backed token relies on the financial strength and reliability of the issuer and custodian responsible for backing the token.

7. Meme coins are known for their extreme price volatility

• Investing in meme coins is highly speculative and may involve a high degree of risks. They may lack inherent value or practical utility and are often driven by social media trends and community sentiment.

8. DeFi tokens are exposed to smart contract vulnerabilities and oracle data inaccuracies

• Smart contract vulnerabilities, reliance on potentially inaccurate external data from oracles, and the possibility of project abandonment are key risks associated with DeFi tokens.

• The unregulated nature of DeFi tokens poses additional uncertainties, as regulatory changes may impact their value and legality.

9. Wrapped and bridged tokens rely on the collateralization and bridging mechanisms

• The value of wrapped and bridged tokens is backed by collateral of another cryptoasset and any issues the collateralization mechanism or the custodian holding the assets could adversely affect their value.

• Issues with the bridging infrastructure may cause transfer delays or token losses, while demand and liquidity disparities with the underlying asset may lead to price variations.

10. Fan tokens are linked to the popularity of sports clubs

• Fan tokens are created for sport clubs fans, offering access to exclusive content, merchandise, experiences, voting rights and other perks within the clubs' ecosystems.

• Their value hinges on club success and popularity, making them highly susceptible to price volatility.

11. 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.

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