TL;DR Breakdown
- UK’s FCA warns against crypto investments
- The financial agency had earlier banned crypto products
The United Kingdom’s Financial Conduct Authority (FCA), has warned consumers against investing in the crypto industry.
In the statement released by the financial watchdog, the warning was specifically targeted at crypto-assets and businesses that mostly promised high profit margins. According to the FCA, any consumer who insists on such investments should be prepared to lose all their money.
The traditional financial agency has severally been wary of the crypto industry. Though, generally, many financial analysts have always spoken about the volatility of the crypto market.
A recent example of how volatile Bitcoin and other crypto assets is, is the recent dip the industry has seen in the last 48 hours. Bitcoin price dropped over $40k to as low as $32k. Ethereum that was on the verge of beating its all-time high also dropped massively.
In recent times, the crypto industry has been on a rollercoaster all-year long, moving from one all-time high to another.
However, due to this volatility, the FCA has warned investors that the Financial Ombudsman Service may be unable to assess their complaints. The ombudsman is a body that settles any dispute between consumers and the businesses that offer financial services.
FCA ban crypto products
The Financial Conduct Authority (FCA) has banned crypto products in the country. According to the authorities, such crypto products were not suited to their retail customers because they were prone to volatility and lacked a reliable valuation.
The authorities also noted that such crypto assets were also majorly being used to fund illegal activities. As such the distribution of crypto derivatives like futures and options is completely banned in the country.
The acting executive director at FCA, Sheldon Mills, noted that the outright ban was needed as a means of protecting the consumers. According to him, the ban reflects the view of the authorities on how they feel the products are harmful to their retail consumers.
