The Financial Conduct Authority (FCA), the U.K.’s top financial market regulator, has issued another warning targeting digital assets. The body maintains that it does not have regulatory oversight over digital assets investments and hence cannot provide investor protection.
While declining to mention specific offenders, the FCA stated that the reminder had been necessitated by a growing number of social media posts related to digital currencies and NFTs.
“There are no consumer protections for those who buy any crypto assets and NFTs, and they are not FSCS protected. As a result, if you buy crypto assets you should be prepared to lose all the money you invest,” the notice told consumers.
The FCA also warns digital currency firms to stick with the U.K.’s guidelines for advertising their offerings. All digital currency-related information must state clearly that digital currency assets are not protected by the U.K.’s financial protection scheme.
“Those marketing crypto assets must stick to the guidelines set out by the Advertising Standards Authority (ASA) and state that crypto assets are not regulated by the FCA,” the FCA added.
Is the FCA out on a digital currency industry witch-hunt?
The warning is an addition to a series of “investor beware” guidelines the FCA has been putting out for the digital currency industry. Previously, the FCA alerted investors that no virtual assets service providers (VASPs) registered with it have the approval to operate a digital currency ATM.
It also directed VASPs operating digital currency ATMs to shut down the illegal activity or be ready to face enforcement actions. Another recent notice warned the public of a likely illegal entry of Binance into the country’s market. The FCA directed Binance to shut down last year.
Amid the notices, the FCA has also recently created a digital currency oversight department. It is looking to hire a department head to lead the regulator’s “approach to regulatory interventions” in the digital currency industry.
The FCA actions have attracted attention from industry experts. Speaking with the Financial Times, Senior Policy Adviser at blockchain analysis firm Elliptic, Mark Aruliah, said the FCA needs to have more experience handling the industry.
“[There needs to be] more experience within the regulator itself to understand what crypto is,” he said.
Aruliah, who was once a technical specialist at the FCA, remarked that there is a marked difference in the FCA’s treatment of traditional firms and digital currency firms. He noted that this difference needs to be removed quickly, especially as the U.K. is looking to become a digital currency hub.