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Investing in cryptoassets

Why it matters to learn

In 2021, research by the Financial Conduct Authority revealed that over 40% of customers investing in crypto assets were either uninformed or misinformed about the associated risks. Prior to October 8th, cryptoasset investments were unregulated in the UK. However, the Financial Conduct Authority has since introduced regulations for firms offering crypto asset investments to UK consumers.

Designed to protect you, these regulations require firms like Zumo to pose additional or alternative questions to ensure that you possess the necessary knowledge to understand the risks associated with the specific type of cryptoasset being offered. We request you to complete a self-categorisation to inform us of your investment profile and an appropriateness test.

Why do I need to take a test to use Zumo?

We ask you to take the appropriateness test to ensure your awareness of the primary risks related to cryptoasset investments.
To assist you in preparing for the test, you can refer to the 12 topics in the section below.

If you don’t pass on your first two attempts, you can retake the test after a 24-hour period. And if you don’t pass the test on the third attempt, you can take a new test only after a 4-week period.

You have a total of 4 attempts to pass the test. If you haven’t passed the test in 4 attempts, we believe that crypto may not be the right investment choice for you. Regardless of the process, you can decide not to invest at any time.

Cooling off period

When you purchase crypto for the first time with Zumo, it is essential that you fully comprehend the inherent risks of crypto and have the opportunity to reconsider. The Financial Conduct Authority now mandates that firms like Zumo provide you with a 24-hour period to contemplate whether crypto investment suits your needs.

This means that you will need to wait for a minimum of 24 hours after starting Zumo’s onboarding process and before you can purchase crypto, subject to passing your identity checks and the appropriateness test. However, remember that you always have the option not to invest.

What you need to know before investing

Our role and scope of our services

Your rights and your obligations with Zumo

Risk of
money loss

Complexity of crypto investments



Business insolvency or failure

Selling your


Your protection against poor investments

Crypto vs mainstream investments

Diversification & 10% max rule

Our role and scope of our services


Zumo Financial Services Ltd (or Zumo) enables you to securely store, transfer, and exchange specific cryptoassets for GBP or other cryptoassets using either a custodian digital wallet, where you entrust Zumo to store your crypto, or a non-custodian digital wallet, where your crypto is stored on the blockchain.

It’s important to note that none of our communications are meant to suggest that investing in crypto is without risk. Furthermore, we do not provide any investment advice or recommendations related to crypto or other assets.

To meet the requirements of UK anti-money laundering, sanctions, counter-terrorist financing, and related laws, we are committed to verifying your identity and closely monitoring your transactions conducted through our platform.

Your rights and your obligations with Zumo


While using our services, it’s important that you follow our Acceptable Use Policy, which can be found in the link below. If you happen to breach any of the policy’s provisions, we reserve the right to take immediate action, which might include the termination of your account, a suspension of access, or other appropriate steps.

You hold full ownership of the cryptoassets involved in exchanges or transfers through our services. As a result, you bear all the associated risks, which may involve potential losses in the value of the cryptoassets held in your Zumo custodian wallet.

It is your responsibility to ensure compliance with all the applicable laws, regulations, and rules in your jurisdiction when using our services.

Risk of
money loss


Cryptoassets are speculative instruments and involve a substantial degree of personal risk.

The value of a cryptoasset is highly volatile and can quickly increase or decrease at any time, and it may even fall to zero. And remember, if you decide to invest in crypto, then you should be prepared to lose all the money you have invested.

It’s important to remember that crypto is largely unregulated in the UK, and you will not be covered by the Financial Services Compensation Scheme or Financial Ombudsman Service, so you should not expect any kind of compensation to cover any form of crypto-related losses.

Complexity of crypto investments


The technology and investments in crypto can be complex, making it difficult to understand the risks associated with the investment.  Tax implications of investing in crypto can also be complex and you may be subject to tax on crypto activity. Not all cryptoassets use the same method to validate transactions, for example proof of work and proof of stake are two different methods commonly used.

A common phrase is ‘do your own research’ as it’s important to understand what you are buying and to be aware of scams which are commonplace and can target anyone.

A good place to start is reading about the underlying technology and protocols, and the commercial and financial aspects of a particular cryptoasset in the whitepaper written by its creator. This is usually publicly available.

Some people invest based on the ethos of the developers and the use case for the crypto itself, other investors may simply be speculating on the price history and volatility of the crypto. While not all cryptoassets are the same, they all pose high risks and are speculative as an investment. You should never invest money into crypto that you can’t afford to lose.


Risks of Cryptoasset Investments


Buying crypto assets expose you to a number of risks, including but not limited to:


Market Dynamics

Cryptoasset trading faces considerable market risks and volatility. The value can swing dramatically, often without prior indication. An asset’s previous success doesn’t guarantee future growth. Remember, investments can decrease in value (including going to zero) and you might not recuperate what you invested.

Liquidity Concern

Some cryptoassets may not be readily convertible to cash due to a lack of liquidity, meaning exiting a position could be challenging, especially during sharp price shifts. Zumo actively works to reduce the risk of low liquidity by offering cryptoassets that have a large and stable supply.

Service Availability

The availability of services like Zumo is not always guaranteed. Service interruptions, unplanned outages or network issues may hinder your ability to perform various crypto operations when needed.

Third-party Involvement

Services like Zumo might collaborate with third-party entities, such as banks or payment providers. Your activities could then be governed by these parties’ terms and conditions, and any losses they may cause are not covered by Zumo.

Security Measures

While Zumo strives for top-tier security, it’s impossible to totally eradicate all security risks. You are responsible for protecting your account details and access to your wallets. Unauthorised or deceitful transactions, once made, might be irrevocable and unrecoverable.

Inherent Digital Asset Risks

Cryptoassets and their foundational technologies come with a number of intrinsic risks, including but not limited to:

– Flaws, hacks, unexpected errors, or unforeseen situations impacting the crypto or its supporting technology.
– Permanent transaction nature, making losses from accidental or deceitful activities non-recoverable.
– Technological evolutions potentially rendering a cryptoasset obsolete.
– Transactional delays, leading to unexpected settlement dates.
– Potential threats to the cryptoasset’s underlying protocol or technology, such as Distributed Denial-of-Service (DDoS) attacks, phishing, hacking, misinformation campaigns, malware, smurfing, spoofing, double spending, majority-mining, consensus-based or other mining attacks, forks, and more.

Continuous Risks Monitoring

Crypto markets operate non-stop, 24 hours a day, 7 days a week. Prices can change dramatically at any moment, including during off-business hours.

Digital Communication Risks

Relying on electronic means to communicate with platforms like Zumo has its issues. Messages can be lost, delayed, intercepted, or not delivered. Whitelist Zumo emails or regularly check your spam folder for service messages.

Currency Fluctuation

Exchanging your crypto to a FIAT currency is subject to market exchange rate fluctuations, affecting your profit or loss.

Regulatory Changes

The legal landscape around cryptoassets is evolving. New laws or regulations can significantly affect the value of your investments, and this varies across different regions.




Cryptoassets are remarkably volatile. The value of crypto is intricately tied to market demand and can undergo sudden and substantial fluctuations. Predicting the long-term price of crypto, even with the assistance of AI, remains an uncertain endeavour.

The value of these assets can swing dramatically, often with little warning, and their past performance offers no guarantee of future growth. Investments can decrease in value, potentially reaching zero, putting your initial capital at risk.

For those seeking a deeper understanding of crypto investments and associated risks, a valuable resource is available through the FCA’s comprehensive guide, accessible on their website,



Some crypto transactions are documented on the blockchain. This revolutionary technology acts as the foundation for various cryptoassets. Although the advanced encryption that secures cryptoassets themselves is difficult to breach, crypto is still vulnerable to cyber-attacks.

It is your responsibility to ensure that you use strong security credentials, that you keep the device through which you access your account safe and secure, you close the app when you are not using it and keep your email account secure at all times.

Keep your security credentials, seed phrase, and private key for your wallets and account secure and never permit others to use your account. You are responsible for anything that happens through your account until it is terminated or suspended.

Crypto and their technologies are also vulnerable to other risks, including financial crime, flaws, transaction irreversibility, and transaction delays

Business insolvency or failure


The provision of custodian wallets for virtual currency is not regulated in the UK. In the event of our insolvency, an Administrator may restrict or block your access to your cryptoassets held in your custodian wallet. This means that you may be unable to recover or convert the cryptoassets held in custody by Zumo back to fiat (£GBP).

Any funds held in your non-custodian wallet are managed by you and would be accessible from any non-custodian wallet provider as long as you have your seed phrase – the twelve random words provided to you when you opened your non-custodian wallet.

Selling your


Unforeseen Circumstances

Certain events beyond our control, like technology outages, low market liquidity for specific crypto assets, or potential cyber-attacks, may limit your ability to sell your cryptoassets when desired.

Market Liquidity

Liquidity concerns are particularly relevant for some cryptoassets, as they may not be easily convertible to cash due to limited market activity. Exiting positions during price swings can be challenging. To mitigate this, we focus on offering cryptoassets with substantial and stable supplies.

Service Availability

While we aim for uninterrupted service, unforeseen events such as service interruptions, unexpected outages, or network disruptions may hinder your ability to perform crypto operations promptly.

Safety Measures

Although we prioritise top-tier security, it’s essential to safeguard your account details and wallet access. Unauthorized or fraudulent transactions may be irreversible and unrecoverable. Protect your login details and credentials just as you would protect the access to your personal bank.

Third-Party Participation

Zumo may collaborate with third-party entities like banks or payment providers. In such cases, your activities might be governed by their terms and conditions, and Zumo cannot cover losses incurred due to their actions.



Zumo is a registered cryptoasset business with the UK’s Financial Conduct Authority (Reg. no 901033). With this registration, Zumo can provide cryptoasset services to its customers, including managing cryptoasset exchanges; in other words, buying and selling.

It’s important to note that the legal landscape around cryptoassets is evolving. New laws or regulations can significantly affect the value of your investments, and this varies across different regions.

Your protection against poor investments


Cryptoassets, including the cryptoassets held in your wallets, are not regulated by the Financial Conduct Authority (FCA) or any other UK regulatory body.

As a result, they do not fall under the protection of the Financial Ombudsman Service or the Financial Services Compensation Scheme. Consequently, you are not protected against potential poor investment performance, cryptoassets’ value fluctuations, or market illiquidity. This means that there is a risk of total capital loss without any legal recourse.

Crypto vs mainstream investments


Investing in and holding cryptoassets is different from traditional investments, such as listed or exchange-traded securities, ISAs or shares. Unlike the more mainstream investments, the world of crypto operates within its unique ecosystem, which brings forth some significant differences.

One of the key disparities is the level of regulation. Mainstream investments are often subject to extensive regulatory oversight, providing investors with a degree of protection and accountability. In contrast, the crypto space is relatively new and less regulated, which can lead to increased risk and reduced legal recourse in cases of disputes or losses.

Additionally, the volatility and unpredictability of crypto is a distinct characteristic. Their values can fluctuate drastically over short periods, far more so than traditional securities. This means that while cryptoassets offer potential for high returns, they also come with a higher risk of capital loss.

Diversification & 10% max rule


It’s generally advised not to allocate more than 10% of your overall assets in high-risk investments. Diversification and spreading your money across different investments makes you less dependent on any one to do well.

Unless you are a high net worth individual (income greater than £100,000 per annum or assets of value greater than £250,000) or certificated sophisticated investor, then we expect that you invest no more than 10% per annum.

Risk Warning & Disclaimers:

The information regarding investment opportunities mentioned on this website are only for informational and promotional reasons and should not be considered as an invitation or encouragement to participate in any investment actions.