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FCA has labeled crypto as the top sector for financial scam warnings in the UK. As of now, there’re only 39 crypto firms operating in the UK legally and 246 companies are not registered.
A report by the UK’s financial watchdog confirmed that the flourishing crypto market has long been linked to the rise in cybercrimes. From April 2021 to March 2022, there are believed to have been 8,568 cryptocurrency scams, as reported by the Financial Conduct Authority (FCA). According to a yearly enforcement summary, this represents a 36% jump compared to the same time in the last year.
The crypto industry surpassed other financial industries by more than doubling the runner-up in this category. It is an aspect of the FCA’s “ScamSmart” initiative. The UK financial authorities have increased their efforts to alert customers to the risk associated with investing in cryptocurrencies.
The significance of this project was stressed by FCA at the yearly public review meeting. As per the CEO of the UK’s financial watchdog Nikhil Rathi, investors should be ready to lose their money.
The FCA probed 432 schemes involving cryptocurrencies in the reporting year. The industry with the highest proportion of customers may be a contributing factor. When reporting potential fraud, 79% of respondents have money invested in cryptocurrencies like Bitcoin, Ethereum, etc. This served as the basis for the FCA’s “tough at the authorization gateway” approach.
“Setting high standards and acting quickly to crack down on problem firms will help ensure market and consumer confidence, supporting the integrity and growth of UK financial services,” stated FCA’s Executive Director of Markets Sarah Pritchard.
Some businesses have been compelled by the FCA’s strict strategy to withdraw their petitions in order to concentrate on EU approval. The survey also revealed that companies outside of the digital asset sector are also having trouble obtaining business authorization in the UK. In the previous year, one in five requests from financial organizations seeking to enter the consumer investment industry were either withdrawn or rejected.
Suggested Read: UK Treasury Committee Launches Inquiry into the Role of Crypto Assets and the Associated Risks