The UK’s Financial Conduct Authority (FCA ) issued another reminder to warn consumers about the risks of investing in cryptocurrencies. In the advisory, the watchdog raised concerns about some social media posts promoting crypto assets and non-fungible tokens (NFTs), although it clarified that comments on individual products could not be made.
“(…) the FCA has not been given regulatory oversight over direct investments in crypto assets and NFTs. There are no consumer protections for those who buy any crypto assets and NFTs, and they are not FSCS protected. As a result, if you buy crypto assets you should be prepared to lose all the money you invest,” the British authority warned.
In addition, the FCA stated that those marketing crypto assets must adhere to the guidelines set by the Advertising Standards Authority (ASA) and state that they do not regulate crypto assets. The marketing of crypto assets must also make it clear that financial compensation schemes do not cover them, the authority pointed out. Moreover, adverts for cryptocurrencies have been investigated by the ASA because they failed to make it clear that the product is not regulated or protected in the UK.
2021 Warning
In a previous advisory published last year, the FCA noted: “The FCA is aware that some firms are offering investments in crypto assets, or lending or investments linked to crypto assets, that promise high returns. Investing in crypto assets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. If consumers invest in these types of product, they should be prepared to lose all their money.”
All UK crypto-asset companies have been required to register with the FCA since 10 January 2021 under money laundering regulations. Not registering can lead to criminal prosecution. “Consumers should be aware of the risks and fully consider whether investing in high-return investments based on crypto assets is appropriate for them. They should check and carefully consider the crypto-asset business involved,” it added at that time.
