FCA Warned Against Cryptocurrency Exchanges
FCA warned against cryptocurrency exchanges. The UK’s financial supervisor, the FCA, pointed to 111 crypto exchanges.
Britain’s financial supervisor, the Financial Conduct Authority (FCA), has warned investors about crypto exchanges, pointing to 111 cryptocurrency companies that are not yet registered with the FCA. Noting that it is not necessary to invest in these exchanges, the FCA described trading through these institutions as “a real risk”.
Mark Steward, FCA chief executive and market surveillance officer, said:
“We have several companies openly doing business in the UK and associated with them without being registered with us consisting of banks, payment services company and consumers. It’s a very real risk, so we’re worried.”
As of January 10, 2021, all UK-based cryptocurrency companies had to comply with Money Laundering and Anti-Terrorism Financing laws and register with the FCA in order to operate legally. But despite all these regulatory measures, many exchanges have yet to registered with the FCA.
According to a recent report, around 2.5 million British adults currently appear to have invested in cryptocurrency assets. It is stated that one of the biggest reasons for this increase is that people staying at home due to the coronavirus pandemic are spending more time online for such activities.
Touching on this issue, Steward says that many new investors run the risk of falling into the tulip mania, the famous 17th century trading frenzy of the Netherlands, and says:
“The reason many are investing now is for fear of missing out on what might explode. Aside from how volatile these instruments really are, there’s a tulip frenzy all around.”