FCA urges crypto companies to warn of risks

The Financial Conduct Authority (FCA) has argued that investment in crypto assets should be capped and that consumers should be warned of the risks.

The regulator wants crypto companies to advise customers that they stand to lose all their money through reckless investment in the sector or overreliance on overnight success stories.

As an additional precaution, the FCA is planning to ban promotions or other financial incentives that companies may use to incentivize consumers into bringing their friends over to their platforms.

The recent market crash of Terra USD and Bitcoin has made regulators more worried about the broader implications for consumers and their savings. The FCA has taken this as a sign that the time to step in and act was now.

“We want people to be able to invest with confidence, understand the risks involved and get the investments that are right for them which reflect their appetite for risk”, said FCA executive director of markets Sarah Pritchard.

She argued that many of the products pushed onto people were not coming with the appropriate warnings or did not offer a clear and fair assessment of the amount of risk that people were taking. Many were misleading, Pritchard added.

She also confirmed that the FCA continues to consider cryptocurrencies as a high-risk speculative market.

The FCA said that buyers must have a clear warning about the risks their purchase entails and said that consumers are not covered by traditional financial safety nets should they end up losing their money on crypto.

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Source

Updated: 08/02/2022 — 12:00