The Financial Conduct Authority oversees certain crypto activities in the UK yet many tokens are not under complete regulation. Which crypto activities is the Financial Conduct Authority regulating at present? And what lacks protection for investors in the UK when compared to their counterparts in traditional investments?
Currently as we speak the regulatory regime of the FCA for cryptocurrencies is quite limited the focus is more on ensuring that financial institutions adhere to registration requirements under anti money laundering regulations and marketing requirements, rather than regulation of the tokens itself. This implies that if there is any issues with your cryptocurrency investment you will not be protected by the Financial Services Compensation Scheme.
the problem is most people believe that because an exchange is functioning within the UK it will be completely regulated and hence very safe however it does not work that way. All that the FCA regulates is AML and marketing practices related to crypto products therefore there is absolutely no regulator which will safeguard your funds if something goes wrong.
FCA has not been silent on this issue. While it regulates the gatekeepers such as exchanges and custody services to some extent the actual cryptocurrencies that underpin all this are outside of the traditional investor protection system. Therefore, it means that unlike with shares or funds, you do not have any compensation plan if your company goes bankrupt.
Crypto companies must be registered through money laundering laws and abide by financial promotion laws by the FCA however so therefore it’s all down to you as an investor because there is no FSCS cover and much less regulation than with pensions or shares.
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