Speaking on BBC Newsnight last night, FCA chief executive, Andrew Bailey, said: “If you want to invest in Bitcoin, be prepared to lose your money.”

In the interview, Bailey said the cryptocurrency is volatile and unregulated, adding that its label as a ‘currency’ is worrying, and that it can be withdrawn from ATMs.

“There is a risk that some people regard it as a fiat currency, which is backed by the state. Bitcoin is not that; it’s a commodity.”

When asked by economics editor, Kamal Ahmed, who’s buying Bitcoin, Bailey said that one of the features of the commodity is the anonymity of holders “so you can’t go and look up records”.

Bailey added that while there have not been any systematic threats, “Bitcoin needs watching carefully, but we’re not there yet”.

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“If people are putting their pension money into Bitcoin than I would be concerned,” he said.

The chief added that the industry needs to be mindful of the production and maintenance of Bitcoin, saying that only 21 million can ever be mined but 17 million have already been mined.

“If it does get widely used, then we need to have greater clarity of it,” Bailey concluded.

A year ago, one Bitcoin was worth around £600 but it recently soared to £12,000. Just this week there were reports that people were taking out mortgages to buy Bitcoin as the ‘mania’ escalates.

Earlier this month, the government sought to bring Bitcoin and other cryptocurrencies under greater regulation amid concerns virtual money can “enable and facilitate cybercrime”.