There’s no ending to the fight against cryptocurrency scams and unlawful businesses.
This time the news comes from the UK where the Financial Conduct Authority (FCA) has recently added more pressure to British businesses that deal with blockchain and cryptocurrencies by raising alerts and regulation standards.
The FCA is “the conduct regulator for 59,000 financial services firms and financial markets in the UK. It’s also the prudential regulator for over 18,000 of those firms.”
In simpler terms, it aims to make sure that financial markets are honest, fair and effective so that consumers get a fair deal.
In 2017 the crypto world witnessed an incalculable number of frauds and scams related to get-rich schemes and companies that had promised crypto services but soon disappeared with consumers’ money or that appeared too blurry to conduct any serious or honest business.
Since then, financial authorities and governments globally have tightened up on these organizations to make sure consumers are more protected against scams and that the market and the whole crypto ecosystem’s reputation is no longer at stake.
In the last year alone, the number of live FCA investigations into cryptocurrency businesses has increased by 74 percent to 87, up from just 50 in October 2018.
It is also estimated that in the UK individuals lost £27m to cryptocurrency and forex investment scams in 2018 and 2019. The main reason being the simplicity for a fraudster to set up a cryptocurrency business and sell tokens since they require almost no physical assets, according to Law firm Pinsent Masons.
David Heffron, a partner at Pinsent Masons, reckons that reinforcement of regulation is actually good news for the market as it will generate a higher degree of confidence that products reaching consumers are less likely fraudulent:
The rise in investigations reflects the FCA’s increasingly hands-on and no-nonsense approach to enforcing the law in the cryptocurrency market. For cryptocurrency businesses acting lawfully these statistics will be encouraging – they want bad actors pushed out.
Along with fraud businesses, also the number of legitimate organizations has risen.
“Since the launch of the FCA’s regulatory sandbox, 52 of the 135 businesses accepted have been cryptocurrency and blockchain-related firms,” Pinsent Masons said. He also added that cooperation between these companies and the FCA has now become a necessity to make sure that the whole market is properly regulated to guarantee a fair and honest environment.