UK’s FCA toughens stance on crypto-businesses with new wave of investigations
The Financial Conduct Authority [FCA], a British regulatory watchdog, has been pushing for a blanket ban on Bitcoin derivatives in the name of consumer protection for a while now. However, despite many users responding by stating that crypto-derivatives are like any other derivatives and are just as risky, the FCA continues to move towards a ban. According to a report, the FCA is taking steps against crypto-related companies.
According to the report, the FCA is examining 87 such firms in the cryptospace, a figure which was 50 in 2018. As per the data provided by David Heffron, a partner at Pinsent Masons, the spike in numbers reflected “the FCA’s increasingly hands-on and no-nonsense approach” to the crypto-world.
The FCA had warned in May 2019 about an increasing trend of online platforms duping investors with crypto and forex scams. The report estimated a three-fold rise in such instances, claiming that nearly 1,800 scams were reported in just a year [2018- 2019]. These scams reportedly amounted to a loss of $33.2 million.
Speaking about how tough approaches could lead to a positive outcome and proves FCA’s determination to enforce the law in the crypto-market, Heffron said,
“For cryptocurrency businesses acting lawfully these statistics will be encouraging — they want bad actors pushed out.”
As per the FCA’s understanding of the subject matter, it noted that users new to cryptocurrencies were prone to scams and their ignorance has accounted for a loss of $492 million just in crypto-derivation from 2017 to the end of 2018. Other factors that have contributed to the heavy losses are leverage and high trading costs, which according to the authoritative body, can be reduced by £234m a year.
CoinShares’ Danny Masters also had a say, claiming that a ban could push users into an unregulated market. He added that it should not be up to the regulatore to decide the future of a certain technology. The Financial Conduct Authority believes otherwise however, stating that it is its duty to safeguard consumers.