FCA's Bailey: Investors Should Be Ready To 'lose All Their Money' In Bitcoin

According to the BBC, Bailey likened investing in Bitcoin to gambling and said the same level of risk is attached.

Describing Bitcoin as an unsecure investment, he told the BBC: "It is not a currency, it is actually not regulated in its Bitcoin form," Bailey . "It is a very volatile commodity in terms of its pricing.

"If you look at what has happened this year, I would caution people. We know relatively little about what informs the price of Bitcoin.

"It is an odd commodity as well, as the supply is fixed," he continued. "If you want to invest in Bitcoin be prepared to lose your money - that would be my serious warning."

Cryptocurrencies: A curse or a blessing?

Bailey added he would not be pressing for a change in rules, arguing that financial regulators were not responsible for overseeing "commodities", while also denying regulators were being left behind by the huge influx of cryptocurrencies.

He commented: "The decision on what we regulate is appropriate for government and Parliament.

"It would be for Parliament ultimately to make that choice if it wished to do so. I do not press for that providing people understand very clearly this is a very volatile commodity.

"[But] if Parliament wants to go further we will happily provide the evidence we have and will support the decision they want to take."

The cryptocurrency has witnessed a remarkable run, rising over 1,500% this year alone from trading at just $952 at the end of 2016. It is currently trading around $17,331 with the price rising over $5,000 in the last two weeks alone.

The FCA head added: "By adopting the name of cryptocurrency there is a risk that some people regard it as the same as what an economist would call a fiat currency.

"A fiat currency is backed by the state and that is what preserves the value of the currency through the actions that central banks take. Bitcoin is not that - it is not a currency."

Earlier this year, JP Morgan CEO Jamie Dimon warned he would fire anyone trading in the cryptocurrency before claiming to would eventually blow up.

"I would fire [any employee] in a second," Dimon told Bloomberg. "For two reasons: It is against our rules, and they are stupid. And both are dangerous."