Crypto Traders Could Be Denied U.K. Compensation When Firms Fail
(Bloomberg) --
Investors in cryptocurrencies could be cut out of Britain's compensation program when companies go bust, according to a proposal by the U.K. Financial Conduct Authority.
The regulator said in a discussion paper on Monday that particularly high risk or alternative investments, such as cryptoassets and unlisted securities, could in certain circumstances be excluded from the Financial Services Compensation Scheme.
The FCA doesn't authorize most firms selling crypto investments, meaning traders would not have access to compensation anyway, yet the proposals mark a hardening of rhetoric and a fresh sign that crypto is largely operating beyond the grasp of global regulators.
The FSCS protects as much as 85,000 pounds ($112,700) per customer if a firm goes bust. Levies on companies have more than doubled in a decade to 717 million pounds after a series of investment firms failed, and the FCA is looking for ways to reduce the cost. The watchdog is also considering whether high-net worth or sophisticated individuals should be eligible to claim compensation.
Crypto has drawn the attention of regulators globally due to volatile price movements as as well as the complexity of the products and lack of consumer protection. Bitcoin, the largest cryptocurrency, fell as much as 21% on Saturday before recovering, while the second biggest, Ether, dropped as much as 17% the same day.
Gary Gensler, chair of the Securities and Exchange Commission, warned in August that the cryptocurrency market is “rife with fraud, scams and abuse” and that “a lot of people will be hurt” if the U.S. government doesn't boost investor protections. The FCA said in November that investors should be prepared to “lose all their money.”
The FCA's latest suggestions are far from a done deal. The regulator said Monday that any change to exclude crypto could add to confusion about what activities and products are protected. Responses are due by March 4.
| Read more |
|---|
| How Crypto Vigilantes Are Hunting Scams in a $100 Billion Market |
| Bitcoin's Outsized Drop Versus Ether May Stem From Macro Link |
| Binance ‘Not Capable' of Supervision in U.K., Regulators Say |
©2021 Bloomberg L.P.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
-
Joining The Dots | Dark Skies, Steady Diya: Why Hope Holds This Diwali
With war, a weak rupee and foreign outflows weighing on sentiment, policymakers at the NDTV World Summit and market veterans at NDTV Profit Ignite: Diwali Edition offered the same advice: stay invested and filter out the noise.
-
The Curious Case of Equitas Small Finance Bank And A CEO Who Quit For Stock
PN Vasudevan believes persistent investor concerns over a perceived conflict of interest had become a governance overhang on Equitas Small Finance Bank's stock, even as the lender improved profitability and asset quality.
-
Talking Points This Week: AI Cash Burn, A Tiger Comeback And An India That Still Finds Its Own Path
India is not immune to higher oil or tighter global liquidity, yet its earnings base is broader, its domestic policy levers are still available.
-
Foreign Investors Own Half Of HDFC Bank and ICICI Bank. An LTCG Cut Could Matter Most Here
Foreign portfolio investors have US$115 billion parked in HDFC Bank, ICICI Bank. If the government cuts long-term capital gains tax, Jefferies says returning foreign money could land here first.
