FCA cryptocurrency investigations rise 74% in 2019
Financial Conduct Authority (FCA) investigations into cryptocurrency businesses have increased by 74% since 2018, as the regulator looks to firm up its role in supervising the nascent technology and its operators.
FCA taking on regulating the crypto industry
According to Pinsent Masons data, the FCA has 87 active investigations underway, up from 50 in October 2018.
During an investigation, the FCA has the power to suspend a company and prevent it from undertaking regulated activities, impose fines, apply to court for injunctions, winding up orders and restitution and bring criminal proceeding against a company for financial crime.
“The rise in investigations reflects the FCA’s increasingly hands on and no-nonsense approach to enforcing the law in the cryptocurrency market,” says David Heffron, partner at Pincent Masons.
“For cryptocurrency businesses acting lawfully these statistics will be encouraging – they want bad actors pushed out. The FCA’s crackdown on businesses operating on its regulatory perimeter will instil a degree of confidence that products reaching consumers are less likely to be scams.”
Related: Libra will lead to financial exploitation, says FCA
In May the FCA released data and statistics showing that around £27 million had been lost of cryptocurrency investment scams.
Pauline Smith, director of action fraud at the FCA, said at the time: “These figures are startling and provide a stark warning that people need to be wary of fake investments on online trading platforms. It’s vital that people carry out the necessary checks to ensure that an investment they’re considering is legitimate.”
The fifth cohort of the FCA’s regulatory sandbox, announced in April, contains eight cryptocurrency firms, while the fourth cohort included 11 companies based around blockchain and distributed ledger technology.
Heffron adds: “The growth of the FCA’s sandbox scheme by cryptocurrency businesses is just one indication of the efforts being made by both businesses and the regulator to work together on these fast evolving products.”
“For those cryptocurrency businesses looking to launch any product, engagement with the FCA is now an absolute necessity. If any business is unsure as to whether they require authorisation, then they should speak to a professional.”
Read more: FCA fines Prudential £23.8m for mis selling retirement products
