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Financial Conduct authority Of UK has announced to investigating unregistered Crypto Venture

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Indrani bose Follow

INDIA

Mar, 08 2022

Mar, 08 2022

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Financial Conduct Authority or FCA of the United Kingdom has announced that it has launched inquiries to crackdown scams and unregistered crypto ventures. In the six months of 2021, it has performed 300 inquiries involving unauthorized crypto businesses and has conducted 50 live investigations, including criminal probes, into authorized companies in the sector.

Around 4300 reports of potential crypto scams were received by FCA’s ScamSmart website during the six-month period ending in September 2021. The authority found 1,600 reports were for pension transfers which was the second most common category of scam.

As per FCA, they received 16,400 inquiries in total which were crypto-related, and possibilities were there that those were scams. These reports were sent by United Kingdom residents between April and September 2021. Sarah Pritchard, executive director, markets, FCA, says: "Consumers need to have confidence when making investment decisions and the data we’ve published today shows how prevalent scams can be. "Before investing, check you know who you are really dealing with, check if they are authorized by the FCA, and do your research to understand the risks that might be posed."

To operate in the U.K, firms that are providing crypto-related services must register with the FCA. In January, FCA opened consultations on proposals to add financial promotion rules for investments that are related to high risk including crypto assets. Until March 23, the body will be accepting feedback.

A registry of around 250 firms is being maintained by the authority which is probably carrying crypto-asset activity, and these are not registered with FCA for anti-money laundering purposes. Despite the fact that there is considerable overlap between unauthorized firms and companies perpetrating scams, the FCA indicated that its registry likely only offers a partial picture of unauthorized activity.


Steps were taken by FCA and ASA to control illegal activities in crypto firms:

Around a quarter of applications from firms who are seeking to join the consumer investment market were stopped by the FCA regulatory body. According to FCA, it would be employing tools including “more assertive supervision and enforcement action," and "being tougher with firms who want to operate” in the United Kingdom.

In 2021, social platforms started to receive pressure from FCA to reduce their crypto advertisement. Other regulatory bodies in the United Kingdom took steps to control crypto firms working with illicit transactions and other illegal activities.

Last year, the Advertising Standards Authority (ASA), banned advertisements from several major crypto exchanges. In December, a promotion made by Coinbase’s European branch was banned saying it was misleading. Another done by Kraken operator Payward was also banned due to a lack of proper warning of potential financial risks. At the beginning of the year 2022, an ad related to crypto interest rates and another ad involved with the instant purchase of Bitcoin with a credit card, both were banned by UK’s Advertising Standards Authority from Crypto.com as ASA found the ads were misleading and irresponsible. It failed to explain the risk of investment and took advantage of inexperienced consumers.

As per the report, on 23rd February, out of 200 firms that applied for Registered Crypto Asset Service providers in the country only 32 firms received the permission. In this year, Uphold’s and eToro's U.K. subsidiaries including Light Technology received crypto licenses from the regulatory body.


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Indrani bose

CBW - External Analyst

INDIA

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