Fresh from enacting its ban on the sale of crypto derivatives to retail traders, the U.K. Financial Conduct Authority (FCA) has issued new warnings about crypto investments to consumers. Meanwhile, commercial banks in the country are adopting a more anti-cryptocurrency stance refusing to accept deposits from virtual currency sources even as the government appears set to create a regulatory framework for digital assets and stablecoins in the wake of its post-Brexit fintech revamp.
FCA Warns U.K. Consumers Against Crypto HYIPs
In a communique issued on Monday (Jan. 11, 2021), the FCA advised consumers to be wary of firms advertising crypto high yield investment programs (HYIPs). According to the U.K. regulatory watchdog, investments in these assets comes at the risk of significant losses.
An excerpt from the FCA’s notice reads:
“As with all high-risk, speculative investments, consumers should make sure they understand what they’re investing in, the risks associated with investing, and any regulatory protections that apply.
The U.K. financial regulator also urged investors to be cautious of firms that contact them “out of the blue” promoting crypto investments. According to the press release, consumers should always check the FCA website to see if such companies are included in its blacklist of known con artists.
Back in Feb. 2020, the FCA introduced new rules for crypto businesses, expanding its regulatory remit over the U.K.’s cryptocurrency scene. These rules which came into force on Jan. 10, 2021, mandates that all crypto firms in the U.K. must be registered with the regulator.
In Dec. 2020, the FCA extended the consideration period for crypto firms that have already applied for an operating license. At the time, the move was necessary to provide additional time for the regulator to process the backlog of pending submissions.
Monday’s warning is coming days after the FCA’s ban on retail crypto derivatives trading came into the effect.
Conflicting U.K. Crypto Policies
On the one hand, the government says it is looking at the creation of clear-cut regulations for the cryptos and stablecoins. As previously reported by BTCManager, Her Majesty’s (HM) Treasury has called for public opinion on its planned cryptocurrency regulatory framework that includes exemptions for Bitcoin and utility assets from stringent legal compliance standards.
However, U.K. banks are reportedly prohibiting customers from depositing profits from crypto trading. According to reports, some banks are wary of accepting transfers from crypto exchanges over money-laundering fears.
With anti-money laundering (AML) protocols being part of the Treasury’s proposed crypto rules, this situation might be resolved once the planned regulations become law.