Customers could be banned from buying crypto-related derivatives such as bitcoin contracts for difference after the City watchdog warned risks were too high for armchair punters.

The move, unveiled on Monday alongside the Budget, will see the Financial Conduct Authority consult in the first quarter of next year on a possible prohibition of CFDs, options and futures linked to cryptoassets

The watchdog, led by Andrew Bailey, ramped up its warning to investors about the nascent sector.

“The FCA has made clear that in its view cryptoassets have no intrinsic value and investors should therefore be prepared to lose all the value they have put in,” it said.

UK spread betting companies IG Group and CMC Markets are market leaders in offering bitcoin CFDs to retail investors.

However, CMC said it had only offered products since February 2018 and were "an extremely small part of CMC’s business”. IG Group declined to comment.

The possible crackdown is one aspect of a high-level government review led by the Treasury, the Bank of England and the FCA, dubbed the Cryptoassets Taskforce, into crypto and blockchain technology.

The report said the taskforce should take “strong action” to limit the risks for investors. In the Budget the Treasury said this would “ensure the UK maintains its international reputation as a financial services centre with high regulatory standards”.

The UK’s move is part of an increasingly rapid regulatory march to get a grip on bitcoin and other cryptocurrencies.

In August European regulators at ESMA placed a temporary restriction on bitcoin CFDs by limiting leverage at 2:1 on the products amid fears about wild swings in prices. Bitcoin is worth $6390 versus a record $19,500 last year.