The UK’s financial regulator, the Financial Conduct Authority (FCA), has issued a warning to consumers against dealing with FTX, the cryptocurrency exchange run by billionaire Sam Bankman-Fried.
The warning letter stated, “We believe this firm may be providing financial services or products in the UK without our authorisation.” It also said, “This firm is not authorised by us and is targeting people in the UK. You will not have access to the Financial Ombudsman Service or be protected by the Financial Services Compensation Scheme (FSCS), so you are unlikely to get your money back if things go wrong.”
FTX did not immediately respond to a request for comment, said the Financial Times.
Furthermore, according to an FCA guide, a divide has emerged between EU and UK crypto regulation, and crypto exchange and wallet providers have to register with the FCA for anti-money laundering supervision if their digital asset activity is “carried on by way of business in the UK.”
UK Alert About Crypto Regulations
Recently, the UK prepared regulations largely targeted at stablecoins. The nature of the asset class and its rapid growth reportedly worried the monetary authorities, as it could be used to destabilize the financial system and evade the sanctions placed on Russia.
Thereafter, the UK Treasury’s Office of Financial Sanctions Implementation introduced new rules under which all crypto exchanges are required to report suspected sanction breaches to UK authorities.
The UK’s new rules were put in place in response to Russia’s invasion of Ukraine and amid growing concerns that Bitcoin and other crypto assets are being used to dodge the restrictions imposed upon the aggressor state in response to its invasion of Ukraine.
On the Flipside
- Recently, the UK’s FCA had a showdown with another offshore digital asset company and popular crypto exchange – Binance – as the country stepped up efforts to regulate cryptocurrencies.
- The FCA intervened against Binance last year, saying its “complex and high-risk financial products” posed “a significant risk to consumers” and that the world’s largest crypto exchange had “failed to” respond to some of its basic queries, making it impossible to oversee the sprawling group.
Why You Should Care
The UK’s FCA has been reassuring investors by clarifying that dealing with financial firms that are authorised or registered by the FCA will give investors greater protection if things go wrong.
Learn more about the UK’s approach to crypto regulation:
UK to Announce New Regulatory Plan Amid Crypto Firm Closure Fears
Read about the latest developments around FTX:
FTX Emerges As The Highest Bidder In The Voyager Digital Bankruptcy Auction