The UK’s financial regulatory body has ongoing investigations into 87 companies with respect to the cryptocurrency business.
According to a report in the Financial Times, the FCA is concerned about risks to UK investors and thus has upped its inquiries into UK-based companies by over 74 percent compared to 2018, with many still ongoing. David Heffron, a partner at law firm Pinsent Masons, told the FT that this number includes early-stage scrutiny as well as full-blown enforcement investigations.
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The FCA would not confirm the names of the 87 companies being probed, however, but it has previously revealed the number of cryptocurrency and foreign exchange scams more than tripled. The City watchdog said that victims lost more than £27 million to over 1,800 crypto and forex investment scams in 2018-19.
Earlier in January, the FCA has taken its first steps towards regulating cryptocurrencies as the watchdog began to answer the call for greater oversight of the growing but volatile market.
Specifically, the City regulator launched a comprehensive consultation on how it should authorize all crypto asset activities from the exchanges on which they trade, to payment companies, wallet providers, and the brokers seeking to offer related derivatives.
Britons want to get rich quick
The regulator published the findings of independent complementary research, which showed that UK consumers buying virtual coins are often looking for ways to ‘get rich quick.’ Many of those interviewed perceived crypto assets as a shortcut to easy money and wealth.
According to the FCA, crypto fraudsters were increasingly using social media to promote their schemes, often using fake celebrity endorsements and images of expensive cars and watches to persuade victims.
The City watchdog is already weighing a potential ban on the sale of derivatives based on cryptocurrencies, in what would be its first major intervention in the nascent market. The aforementioned consultation could lead to prohibiting the sale of derivatives, including CFDs, options, and futures, based on cryptocurrency prices to retail investors.
The actions came after the FCA has already moved to make permanent stricter leverage conditions for CFDs trading and an outright ban on binary options.
The FCA doesn’t consider cryptocurrencies themselves regulated assets, but derivatives on the back of them fall under its powers of oversight.
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