UK FCA Targets Unregistered Cryptocurrency Trading Firms
The British regulator initiated an investigation against cryptocurrency related businesses that might be engaged in providing financial services without obtaining permission.
The UK's Financial Conduct Authority (FCA) has increased its efforts aimed at bringing discipline to the cryptocurrency trading industry. The watchdog has been investigating 50 companies over unlicensed operations, which is twice as much as in May, The Telegraph Moneyreports.
Responding to a request submitted by the media outlet, the regulator also added that it was looking into seven whistle-blowing reports from employees engaged in the cryptocurrency sector. Notably, there were no reports on wrong-doing during the previous three years.
Andrew Jacobs, a partner at Moore Stephens, an accountancy firm, believes that the tightened approach of the regulator is natural as scams and frauds are often exposed during bear markets when investors start incurring losses and employees are deprived of bonuses and generous compensations.
“The huge sums lost as a result of cryptocurrency prices falling this year will have triggered a rash of complaints to the FCA. Now that prices have collapsed, fraud is likely to be exposed, with greater pressure coming to bear on the FCA to ensure that this market can operate transparently and fairly," he explained as cited by Telegraph.
Bitcoin and other popular cryptocurrencies crashed this year. Altcoins have followed the lead and extended the overall losses on the market where over $700B has been wiped out since the beginning of the year. It means that both speculators and believers in peer-to-peer monetary systems beyond the control of the world’s central banks feel the pain of the epic collapse that exposed the limitations of the industry and weeded out weak players.
In October, the Cryptoasset Taskforce, a body established by the Treasury, Bank of England and FCA, published its first report on the risks and vulnerabilities related to an unregulated cryptocurrency industry. The experts concluded that derivative instruments posed severe risks for unsophisticated retail investors and proposed a complete ban on cryptocurrency-based CFDs, options, and futures.
Meanwhile, FCA chief Andrew Bailey called for a balanced approach to the new industry.