3.10.2. Risk warnings

(1) A Digital Asset Service Provider must display prominently on its website the following risk warnings relating to Digital Assets:

(a) (except in the case of a Central Bank Digital Currency) that Digital Assets are not legal tender or backed by a government;

(b) that Digital Assets are subject to extreme volatility and the value of the Digital Asset can fall  quickly (including, in respect of a Fiat stablecoin or Commodity stablecoin, if it loses its stability peg);

(c) that an investor in Digital Assets may lose all, or part, of the value of their investment;

(d) that Digital Assets may not always be liquid or transferable;

(e) that investments in Digital Assets may be complex making it hard to understand the risks associated with participating in them;

(f) that Digital Assets can be stolen because of cyber attacks;

(g) that trading in Digital Assets is susceptible to irrational market forces;

(h) that the nature of Digital Assets may lead to an increased risk of Financial Crime;

(i) there being limited or, in some cases, no mechanisms for the recovery of lost or stolen Digital Assets;

(j) the risks of Digital Assets with regard to anonymity, irreversibility of transactions, accidental transactions, transaction recording, and settlement;

(k) that the nature of Digital Assets means that technological difficulties experienced by a Digital Asset Trading Facility Operator may prevent access to or use of a Client’s Digital Assets;

(l) that participating in Digital Assets is not comparable to participating in traditional investments such as Securities; and

(m) that there is no recognised compensation scheme to provide an avenue of redress for aggrieved participants.

(2) If a Digital Asset Service Provider presents any marketing or educational materials and other communications relating to a Digital Asset on a website, in the general media or as part of a distribution made to existing or potential new Clients, it must include the risk warning referred to in 3.10.2 (1) in a prominent place at or near the top of each page of the materials or communication.

(3) If the material referred to in 3.10.2 (1) is provided on a website or an application that can be downloaded to a mobile device, the warning must be:

(a) statically fixed and visible at the top of the screen even when a person scrolls up or down the webpage;

(b) included on each linked webpage on the website; and

(c) If, due to limitations on the medium of communication used, it is not practicable to provide the material referred to in DAA 2.8.10(1), reference may be made instead to the fact that participation in Digital Assets is a high risk investment, accompanied with a link to the relevant section of the Digital Asset Service Provider’s website where the material referred to in DAA 2.8.10 (1) is provided.