UK FCA warns of cryptocurrency investments announcing high returns
The UK Financial Conduct Authority (FCA) has warned consumers about announcements about investments in cryptoassets that promise high returns. The authority said that if investors are investing in these products without any research or understanding, they should be "Prepared to lose all their money."
The UK financial regulator on Monday January 11th issued a warning very blunt about the rise of bitcoin and other cryptocurrencies. FCA said that due to the recent surge in Bitcoin and other crypto assets, companies in the country are offering high returns on investment in these assets.
The statement says:
“The FCA is aware that some companies are offering investments in crypto assets, or loans or investments linked to crypto assets, which promise high returns. Investing in crypto assets, or investments and loans linked to them, generally involves taking very high risks with investors' money. If consumers invest in these types of products, they must be prepared to lose all their money.
The regulator advised consumers to make sure they understand what they were investing in, the risks associated with investing, and the regulatory protections in place. FCA recommends that users consult its document PS19 / 22: Guide on Crypto Assets to find out which cryptocurrency activities are regulated by the FCA.
The FCA has also suggested that consumers take a cautious approach if they are “pressured to invest quickly or are promised returns that sound too good to be true,” and they should consult its guidelines to protect themselves from fraud.
The authority also notified all crypto companies to register from now on. FCA stated:
“Companies that offer these products must ensure that they comply with all relevant regulatory requirements and that they are authorized by the FCA when necessary. As of January 10, 2021, all UK crypto companies are required to be registered with the FCA under the regulations to address money laundering. Operating without a registration is a criminal offense. '
The regulator is not critical of crypto assets and only wants to protect consumers from the negative effects of high-yield crypto-asset-based investments. FCA said it is concerned, as some high-performing crypto-asset-based advertisements may not be subject to regulations beyond anti-money laundering requirements. In addition, the price volatility and complexity of crypto products so that consumers understand the risks. Unregistered companies "They may exaggerate product returns or underestimate the risks involved."
Therefore, FCA has asked consumers to be aware of the risks and should invest with companies that are on the Financial Services Registry or on the list of companies with Temporary Registration.