FCA CEO Says Investors Should Not Be Compensated for Crypto Losses
FCA CEO Nikhil Rathi suggested that the UK government should not compensate people who invest in cryptocurrencies in the event of a loss.
Digital assets are also used for criminal activity so investors who trade them must be prepared to lose all of their money. The FCA CEO put his proposal to the Treasury Committee when asked for his views on the crypto industry. He said that Bitcoin and other altcoins are intermediaries in serious organized crime and money laundering, so investors need to be aware of the risks before entering the market. The Financial Services Compensation Scheme no longer reimburses investors who have lost money trading cryptocurrencies:
“I suggest we just say that anything crypto-related should not be compensated, that consumers should be aware of it when they invest.”
FSCS is a UK statutory deposit insurance and investor compensation scheme for clients of authorized financial services companies, meaning locals are eligible for reimbursement if they fall victim to fraudulent activity in the cryptocurrency market. Rathi added that the FCA has seen a surge in applications in recent months from exchanges seeking regulatory approval, but many have not yet obtained a license. Rathi became CEO of FCA last year and began pushing for a more aggressive approach to protecting customers from fraud.
Earlier in the year, the FCA warned local investors to be wary of the risks associated with investing in cryptocurrencies, especially unregulated companies that promise high returns. The regulator reiterated that those who trade BTC and altcoins must be prepared to lose money. According to the CEO of NatWest, the UK is a great place for crypto scammers. Rathi advises people to stay away from the crypto sector which is full of scammers creating fake platforms. Lindberg went further, stating that he had not yet seen the market deteriorate the worst because of the UK scams, saying the problem could be resolved if the UK government, banks and police join forces and fight the bad guys together.