UK Edition
The Post Office has been accused of giving legitimacy to high-risk investments after teaming up with a cryptocurrency trading business.
Bosses at the state-owned institution have signed a deal with Swarm Markets, an exchange which connects buyers and sellers of online tokens including cryptocurrencies such as Bitcoin. The agreement allows Swarm to use the Post Office’s identity verification app, which is called EasyID.
Users who have verified their identity through the app will be able to access Swarm's website and purchase cryptocurrency vouchers with a few taps of their phone. The vouchers can then be redeemed for cryptocurrencies such as Bitcoin and Ethereum.
The Post Office will not receive commission on vouchers sold, but is paid for use of its ID verification software. Swarm pays funds to Yoti, a company which partners with the Post Office on the app.
Experts warned of the risks of cryptocurrencies and expressed surprise at the Post Office tie-up. Warren Shute, a chartered financial planner, said: “When people buy cryptocurrencies, they should be sold with a very clear wealth warning: that you could get back a lot less than you purchased. It's one thing buying crypto online via an investment platform as that's what the audience expects, but you don't associate this with the Post Office.”
Bitcoin has proved exceptionally volatile, soaring to an all-time high of $63,000 in April this year before losing half its value over the following three months, including a 41pc drop in just two weeks in May.
Its latest slump came just this week, when Bitcoin fell 10pc in value on the day that El Salvador became the first country to accept the cryptocurrency as legal tender. One Bitcoin now costs $47,000.
Dame Angela Eagle, an MP who sits on the Treasury select committee, said: “It’s extremely concerning ... The Post Office is running a huge risk of completely damaging a trusted brand. They’re risking their own brand for something which is unregulated, and giving it legitimacy and credibility. I think they should stop it right away.”
Baroness Nicky Morgan, former chairman of the Treasury select committee, said: “It does seem a very odd thing for the Post Office to get involved with.”
This year the Financial Conduct Authority, the City regulator, warned that people buying Bitcoin did not understand it, cautioning the cryptocurrency was extremely risky as prices could go to zero.
It found that only 58pc of people believed they had a good understanding of how cryptocurrencies worked and warned investors betting on them to be "prepared to lose all their money".
Berlin-based Swarm Markets is regulated by BaFin, the German financial regulator, and allows users to trade and store cryptocurrencies, as well as lend out their investments to earn interest, known as “yield farming”.
Philipp Pieper, of Swarm Markets, said: “By making it easy and safe to buy real Bitcoin and Ethereum, more people now have the option to get started in crypto.”
A Post Office spokesman said: “Access to products and services are increasingly moving online and we’ve responded to this shift by launching our free-to-use app, Post Office EasyID, allowing people to build their own secure digital identity on their smartphone and enabling them to easily control and prove who they are to whichever business they want to interact with.”