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Summary
- The UK adopted registration requirements for crypto-asset firms from the beginning of 2020
- FCA has urged the investors to pull out their money from unregistered crypto-asset firms
- It is imperative for a regulatory body like FCA to intervene for the best interest of investors to protect their hard-earned money
British financial regulator Financial Conduct Authority (FCA) is expected to go hard on unregistered crypto-asset firms. The FCA has urged the investors to pull out their investments from unregistered firms at the earliest.
The FCA on Wednesday said that the companies which started operating after 10 January, 2020 will be given temporary registration over the period from 9 January 2021 to 9 July, 2021. The existing firms seeking registration are allowed to operate until 9 July 2021 under the temporary regime. Crypto asset trading platforms that have applied for approval by 15 December but have not yet had their applications processed would also be granted temporary registrations.
Due to the coronavirus pandemic, the regulator has not been able to visit the firms as customary norm due to the complexity and the number of applications received. Therefore, the assessment of these firms was delayed. Notably, firms that have still not applied for registration can be asked to halt operations any day as they are not eligible for a temporary approval for registration.
Also read: FCA predicts disruptions in financial markets post the end of Brexit transition
FCA rules
According to the financial watchdog, the unregistered crypto-asset firms are supposed to return the money to the investors before 10 January. After that date, any trading would be considered illegal. Investors should withdraw their assets from firms that have not sought registration till now. The crypto asset trading firms are being pushed for registration to check for white collar crimes such as money laundering and tax evasion. The UK adopted registration requirements for crypto-asset firms at the beginning of 2020.
It is imperative for a regulatory body like FCA to intervene for the best interest of investors to protect their money and interest. In October, FCA banned the sale of certain types of crypto-based investment products for retail investors.
Also read: Bitcoin surged to an all-time high of US$23,700, High traffic crashed exchanges
The lure of virtual currency
Apart from conventional investors, Crypto assets entice young investors and speculators. These investments could lead to unexpected losses. As it is a relatively new product, investors might not have a proper understanding of these products. Also, these investments are extremely volatile in nature and have no concrete basis for valuation. Therefore, investing in these assets can be risky.
The FCA, therefore, has been discouraging exchange traded derivatives, and contracts for difference (CFD) based on cryptocurrencies and ban firms from selling, marketing, and distributing products that track the price of crypto assets.
The rules and regulations for crypto asset firms are absolutely necessary. Cryptocurrencies can be traded globally through digital platforms, without the involvement of existing banking and financial systems. Therefore, it can become a soft target for people willing to transfer their illegitimate money.
Moreover, being a global currency, nobody would take responsibility for any possible white-collar crime that might take place through these unregistered crypto-asset firms.
