The Financial Conduct Authority (FCA), the UK’s financial markets regulator, recently presented a short notice for concerned FTX customers from Great Britain. The institution merely reminds us that it does not regulate the cryptocurrency market and investors are most likely left to face this problem on their own.
The FCA refers to news that the cryptocurrency exchange, FTX has filed for bankruptcy in the United States and liquidation in the Bahamas. Without going into details, the regulatory market watchdog assures that more information on the subject will be published in the coming days.
“Any FTX customers who have financial concerns can receive free, impartial financial guidance from Moneyhelper,” the FCA stated in the press release.
However, the market watchdog reminds us that, regulation of the cryptocurrency market in the UK is limited solely to the registration of cryptocurrency platforms under anti-money laundering and counter-terrorist financing regulations. The FTX exchange was, therefore, not authorized or regulated by the FCA like traditional investment firms. As a result, the regulator’s assistance to FTX customers is limited to providing financial advice.
FCA Is Doing Too Little?
The collapse of the FTX exchange is bringing back the topic of cryptocurrency regulation like a boomerang. In the UK, cryptocurrencies are the most frequently reported potential financial crimes. The FCA opened more than 2,700 investment fraud cases in one year alone.
The FCA data shows that the majority of consumers (79%) seek help from the regulator once a fraudulent cryptocurrency project has scammed them. Given the current lack of legislation on digital assets and regulatory protection, it is often too late to do anything.
Under the Money Laundering Regulations (MLRs), the regulator opened 432 cases against potential fraudsters in the cryptocurrency market from April 2021 to March 2022. However, if such entities were required to apply for licenses like other members of the capital market, potential fraudsters could be identified much quicker.
Last week, the FCA announced it is looking for members for its Innovation Advisory Group, which was set up in July 2022. The advisory body will cover the FinTech and cryptocurrency industries.