The Financial Conduct Authority (FCA) is soon becoming one of those agencies that flip flop on their stances. The UK regulatory body put out a statement that people should be wary about putting their money into cryptocurrencies.
The regulatory body published the Final Guidance which sets out the cryptoasset activities it regulates, on Wednesday. In a press release, the regulatory body said that the Guidance would help firms understand if their cryptocurrency activities would be regulated by the FCA.
Christopher Woolard, executive director of Strategy and Competition at the FCA, said, “This is a small, complex and evolving market covering a broad range of activities. Today’s guidance will help clarify which cryptoasset activities fall inside our regulatory perimeter.”
The press release further added that consumers should be mindful of the absence of certain regulatory protections when considering purchasing unregulated cryptoassets. Unregulated cryptoassets (e.g. Bitcoin, Ether, XRP etc.) are not covered by the Financial Services Compensation Scheme and consumers do not have recourse to the Financial Ombudsman Service.
The FCA said, “Traders should be cautious when investing in such cryptoassets and should ensure they understand and can bear the risks involved with assets that have no intrinsic value.”
The stance should not come as a huge surprise as earlier this month, we had reported that the Financial Conduct Authority (FCA) was proposing rules to address harm to retail consumers from the sale of derivatives and exchange traded notes (ETNs) referencing certain types of cryptoassets.
At the time, Woolard had said, “As with our work on the wider CFD and binary options markets, we will act when we see poor products being sold to retail consumers. These are complex contracts built on top of complex assets.”
But, recently, the regulatory body said that it was reportedly looking for candidates who had extensive knowledge related to cryptocurrencies. The official website described the role as one that will involve, “considerable amounts of liaison and stakeholder management with internal and external patterns on the topic of crypto assets, financial and economic crime linked themes and the role of various processes and areas in regulating this activity.”
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