On Wednesday, Nikhil Rati, CEO of the UK Financial Conduct Authority (FCA), made the following statement to the Finance Committee when asked about the risks of the country’s unregulated crypto sector:
When we talk about compensation plans, we need to draw pretty clear lines. I would recommend that anything cryptocurrency-related should not qualify for compensation, and consumers should be clearly aware of this when investing.
In this excerpt, Rati refers to the Financial Conduct Authority (FCA) Financial Services Compensation Scheme, or FSCS, which compensates consumers when certain authorized financial institutions fail to meet their requirements, such as bankruptcies, criminal schemes or insurance violations. In theory, the proposed rules would prevent the UK government from paying compensation to crypto investors who have been tricked by alleged cryptocurrency exchanges or decentralized financial machinery, as this type of investment is either unregulated or operates in legal gray areas. The FSCS has paid out more than £ 717 million to consumers this year to compensate for their financial losses.
Nikhil Rati speaks at hearings in the Finance Committee | Source: par Parliamentlive.tv
“There are core technologies for cryptocurrencies that I think we recognize have great benefits and value, such as fighting economic crime. However, we have expressed concern about a number of innovations, Ratti said when asked about the country’s regulations and framework. These cryptocurrencies have an intrinsic value. They were part of a chain of organized crime and money laundering, and anyone who invests in them should be prepared to lose all their money. “