Financial Conduct Authority (FCA) is the UKs Financial watchdog. And it has issued warnings to Bank CEOs over over the potential risks they face when dealing with cryptocurrencies.
There are about 58,000 financial services firms and financial markets in the U.K and FCA is the financial regulator to all these financial firms.
In the latest warning from the British regulator to Banks, the FCA addresses the banks specifically and urges greater scrutiny of client and customer activities if they are deemed to be dealing in what the agency calls “cryptoassets.”
While acknowledging that not all businesses and individuals holding or trading in cryptocurrencies would pose the same degree of risk, the FCA did flag a few “high-risk” indicators. These include a client using a state-sponsored cryptocurrency, “which is designed to evade international financial sanctions” – presumably a hint that trading Venezuela’s petro token will get your account closed.
FCA also issued warnings on CryptoCurrencies fraudulent activities, which includes retail customers seen to send large sums to token sales, or initial coin offerings (ICOs). According to the FCA letter, these customers are at a “heightened” risk of investment fraud.
FCA however, made it clear that not all cryptocurrencies trading or involvements are wrong or fraudulent in nature. It continues, but given the “potential anonymity and the ability to move money between countries,” the FCA expects financial firms to exercise “particular care” when dealing with cases involving cryptocurrencies.