The UK’s Financial Conduct Authority said in a brief statement Monday that local investors should use extreme caution when dealing with unauthorized firms known to have been soliciting customers in the UK jurisdiction.
The regulator specifically pointed out that one of the brokers highlighted in the latest flurry, Markets Pilot, is offering cryptocurrency-related services to British residents without beauthorizedised to do so.
Markets Pilot is posing asauthorizedised company and claims to be a trading name of Click World Ltd, Cnr Old and Church Street. Additionally, the company is targeting UK investors with a full range of offshore investment services, including cryptocurrencies.
Britons that have been approached by Markets Pilot should contact the FCA, and anyone that has transferred money to the firm should report the incident to Action Fraud, the regulator further states.
Moreover, the City watchdog emphasized that anyone who deals with an unauthorized firm is not protected by the UK lifeboat scheme, and thus cannot complain to the Financial Ombudsman Service.
FCA concerns underpin retail ban
The latest warning comes ahead of scheduled applicability of final rules banning derivatives that allow investors to take a view on the direction of the price of crypto assets. The ban will come into effect on January 6, 2021, and affCDs CFDs, options and futures, as well as exchange traded notes (ETNs) that relate to unregulated cryptoassets.
The FCA estimates the prohibition would save investors £53 million ($69 million) a year in losses, but it would not force them to liquidate their existing trades.
The FCA considers these products are ‘ill-suited to retail consumers’ who cannot assess the risks of derivatives or ETNs that reference certain crypto-assets.
The UK government has also proposed to bring the promotion of crypto-assets into the scope of the FCA’s existing oversight, rather than creating a new framework specifically for these products.
Citing concern over investor protection, the authorities said that even companies that sell regulated investments with an underlying cryptocurrency element will need FCA authorization to do so depending on their activities.
Providing the FCA with power to regulate the promotion of certain types of cryptoassets, for the first time, would be the quickest way of doing this and stamping out misleading advertising.