UK regulator warns consumers about risks in crypto investment

UK financial services regulator – FCA has gotten tougher on crypto recently – banning the sale of crypto derivatives to retail investors and warns firms operating in the UK without registration are committing a criminal offense.

Now FCA on Monday warns consumers of the risks of the investment in crypto assets.

The warning from the UK’s Financial Conduct Authority (FCA) comes amid wild volatility in the cryptocurrency market. The regulator is concerned that the high risks inherent in crypto assets such as price volatility, lack of consumer protection, scams as well as unregulated firms targeting consumers with marketing material that highlights the rewards but not the potential downside of investing in crypto assets.

UK’s FCA clamping down on crypto trading firms

FCA remarks on lack of consumer protection and unregulated firms relate to last year’s registration notice to UK’s crypto firms. Under the new legislation, crypto firms need to register themselves with FCA by 15 Dec 2020.

With the wealth of fintech experience in the country, it’s not surprising that there are a number of promising crypto start-ups in the UK. Some industry insiders reckon there are as many as 400 firms that seek to apply on the crypto register and a good number of startups on that list that ought to leave behind and stop trading.

Those who applied are allowed to continue operating temporarily after 9 January 2021 until 9 July 2021, pending the FCA’s determination of their application. Firms that did not submit an application by 15 December 2020 will not be eligible for the temporary registration regime. They will need to return crypto assets to customers and stop trading by 10 January 2021. Firms that do not stop trading by that date are at risk of being subject to the FCA’s criminal and civil enforcement powers.