The Financial Conduct Authority (FCA) issued a warning to British investors today about two cryptocurrency companies which are not authorized to provide investment services in the country – Local Bitcoin Ltd and BK Coin.
The warning comes as European finance ministers are scheduled to discuss cryptocurrency next week to investigate benefits and risks, and consider how the new assets should be regulated.
The UK has so far taken a watchful approach. The FCA itself doesn’t consider cryptocurrencies to be regulated assets, but derivatives based on them fall under its powers of oversight. Last month, it named a small number of crypto-linked firms as having been accepted to its sandbox, which allows them to test their services and business models in a live but controlled environment.
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Back to the warning, Local Bitcoin Ltd and BK Coin, apparently run the by the same persons, are targeting UK investors by offering a full range of cryptocurrency investment services, including CFDs. However the FCA stresses that the regulation claimed on both websites is fake.
This warning is yet another case in which the British authorities seem to have stepped up their game and gone after illegal cryptocurrency brokers. In November 2017, the FCA issued a warning for investors regarding cryptocurrency contracts for difference (CFD), explaining the risks involved.
Last month, the UK Prudential Regulation Authority issued a letter to CEOs of banks, insurance companies and investment firms to advise them about the risks associated with “crypto-assets”. The PRA’s letter has provided the financial operators with guidelines to improve their oversight, increase scrutiny and enhance due diligence checks.