U.K Financial Watchdog Increases Scrutiny on Cryptocurrency Exchanges
The Financial Conduct Authority (FCA), the U.K’s financial regulator, has increased its investigations on cryptocurrency exchanges operating in the country. According to a report by the Financial Times on October 6, 2019, the regulator is intent on fishing out fraudulent virtual currency exchanges.
More Cryptocurrency Exchanges Come Under the FCA Radar
Per information gotten from the FCA data by David Heffron, a partner at the international law firm, Pinsent Masons, the U.K. financial watchdog is currently investigating 87 cryptocurrency exchanges in the country.
The number of cryptocurrency exchanges currently being investigated marks a sharp increase from the number of exchanges probed last year. In 2018, the FCA looked into 50 virtual currency companies that were suspected to be conducting businesses without the go-ahead of the regulator.
Speaking on the increased scrutiny of the U.K. financial watchdog, David Heffron said:
“The rise in investigations reflects the FCA’s increasingly hands-on and no-nonsense approach to enforcing the law in the cryptocurrency market. For cryptocurrency businesses acting lawfully, these statistics will be encouraging – they want bad actors pushed out. The FCA’s crackdown on businesses operating on its regulatory perimeter will instill a degree of confidence that products reaching consumers are less likely to be scams.”
The FCA, like many other regulators globally, has been attentive to the cryptocurrency industry. In July 2019, the U.K. regulator released its final guidelines on the regulation of virtual currencies, to help investors know which exchanges are regulated and to help participants know if their businesses fall under the regulatory wing of the FCA.
FCA Acting in the Interest of Cryptocurrency Investors
However, the increased probe into the activities cryptocurrency exchanges is not without cause. The FCA repeatedly warned investors to be wary of bitcoin scams offering bogus returns on investment. The U.K. financial regulator stated that about $255 million were lost to fraudulent scams in 2018 alone.
In July 2019, fraudsters impersonated the FCA in a scam email, in order to deceive investors into investing in a fraudulent bitcoin scheme. The watchdog came out to warn investors not to pay heed to the email, as the regulatory agency would never ask for money or sensitive financial details.
A recent report by BTCManager stated that the FCA was considering placing a blanket ban on cryptocurrency derivatives, a decision that would be made in 2020. According to the regulator, the ban would help reduce investors’ losses drastically.