Understanding the Rise in Investigations
In 2019, the Financial Conduct Authority (FCA), the watchdog of the UK’s financial world, witnessed a jaw-dropping 74% surge in investigations related to cryptocurrency. From a mere 50 cases in 2018, the number skyrocketed to 87 cases this year, indicating that regulators are taking a closer look at this often-volatile market. This information was brought to light by local law firm Pinsent Masons, as highlighted in a Financial Times report.
The Scope of Investigations
The investigations aren’t just limited to your typical back-alley scams; they encompass both initial scrutiny of businesses and extensive enforcement actions against errant operators. It’s like a reality show titled ‘Keeping Up with the (Crypto) Kardashian’ — just as dramatic, but hopefully with fewer bad wigs and more financial literacy!
The Positive Side of Increased Scrutiny
According to David Heffron, a partner at Pinsent Masons, the heightened scrutiny reflects the FCA’s firm approach to maintaining law and order in the crypto domain. Heffron conveyed a silver lining in this increase: “For cryptocurrency businesses acting lawfully, these statistics will be encouraging — they want bad actors pushed out.” It’s a bit like a bouncer filtering out the drunken troublemakers from a nightclub, allowing the genuinely good folks to enjoy their evening.
Scams and Individual Losses
While the FCA’s increased vigilance is noteworthy, it also revealed some sobering news. The regulator reported that U.K. losses due to cryptocurrency and forex scams exceeded $34 million between 2018 and 2019. However, fortunately, the average individual loss fell from a staggering $76,000 to a more manageable $18,500. So, maybe there’s a glimmer of hope for the average unsuspecting investor who still wants to dip their toes in the crypto pool without hitting a diving board!
The FCA’s Regulatory Approach
Despite the crackdown, the FCA has made it clear that it does not intend to regulate Bitcoin (BTC) under its guidance on crypto assets. However, plans for a potential ban on the sale of crypto derivatives targeting retail investors are in the air. It seems the FCA is leaving some crypto products open for business while creating a safety net for less experienced traders. Think of it as giving a kid in a candy store a list of approved items — sugar rushes are still a go, but no Skittles for you!
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