People Should Be Cautious about Crypto Investing, Says Lord Hammond

Lord Hammond, a British politician and former UK Chancellor of the exchequer, has urged crypto investors to remain cautious about their investments. According to him, crypto is not suitable for retail investors as a mainstream investment category.

Earlier this year, Hammond joined Copper, a leading UK-based provider of digital asset custody and trading infrastructure, as a Senior Adviser. Between 2016 and 2019, Hammond worked as the Chancellor of the Exchequer. Previously, he served as Foreign Secretary and Defence Secretary.

“It's almost certainly not suitable for retail investors as a mainstream investment category. I know plenty of people who have a small exposure to crypto-assets but it is money they've written off. It's gambling money. I think people should be extremely cautious. Many regard them as closer to gaming than serious investing,” Hammond told The Mail in a recent conversation.

The comments about crypto assets from Hammond came approximately 10 days after the Bank of England, the central bank of the United Kingdom, issued a warning on the rising crypto market. According to BOE, digital assets are risky for UK’s financial stability.

Andrew Bailey

In addition, the Governor of BOE, Andrew Bailey criticized Bitcoin and other crypto assets in the past due to their volatility and risky nature. In an event organized by the Cambridge Student Union in November 2021, Bailey said that El Salvador’s initiative to accept Bitcoin as legal tender in the country is a worrying sign. Furthermore, he expressed his concerns about the financial complexities caused by the use of crypto assets.

Despite different concerns, digital currencies are becoming popular among retail and institutional investors. Due to rising popularity, leading digital assets like Bitcoin and Ethereum have attracted substantial investments in 2021. BTC and ETH now have a combined market cap of $1.5 trillion, which is nearly 60% of the total market cap of cryptocurrencies.