The UK Financial Conduct Authority (FCA) released a brief statement on Monday, warning investors against unauthorized firms that are soliciting investments from Britons.
Investors could lose their money
The FCA warned investors of using extreme caution while dealing with companies offering crypto services. It also flagged a broker called Markets Pilot for offering unauthored crypto-related services to Britons. The company posed to be an authorized firm, and a brand of Click World Ltd, Cnr Old, and Church Street. The company is also targeting investors in the UK providing them offshore investment services.
The regulator has asked all investors approached by Markets Pilot to contact them. Any person who has transferred money to the company was asked to report to Action Fraud. The regulator also emphasized that dealing with any unauthorized firm means that the investors will lose their protection from the UK lifeboat scheme. They will also not be able to make use of the Financial Ombudsman Service.
New rules related to crypto exchange and CFDs arriving soon
A new set of rules banning derivatives trade for retail investors will be effective on January 6, 2021. It will be affected options and futures, exchange-traded notes (ETNs) related to cryptocurrencies, and CFDs to retail customers. According to the FCA, investors will save over $69 million in losses due to the ban. However, it will not force them to liquidate any existing trades.
The regulator suggests that these products are not well suited to retail customers. The government is planning to bring crypto-asset promotion under the oversight of the FCA instead of creating a new framework. To protect the investors, the authorities said that regulated firms dealing in cryptocurrencies will also have to get FCA authorization before they are able to provide such services to customers.
From January 2021, the FCA will have more control over crypto promotions in the country which will help it in removing misleading ads targeting retail customers as well.