With prices of cryptocurrencies plunging, new figures are showing that regulators are stepping up investigations into the sector. The number of inquiries into crypto businesses has doubled. That is according to figures from the Financial Conduct Authority (FCA) obtained by Telegraph Money.
FCA Inquires into the Operations of Crypto Businesses
The FCA said it had conducted inquiries into 50 companies it suspected of operating in areas of financial services without permission. Earlier in May, it had looked at only 24 firms. Also, the regulator stated it had received seven whistle-blowing reports from worried employees of crypto businesses this year. There had been none in the past three years.
Bitcoin, the biggest cryptocurrency by market capitalization, is one among thousands of virtual currencies. The price of Bitcoin surged to about $20,000 in December 2017, but this week it has fallen to below $4,000 for the first time in 18 months. Prices of other cryptos in the market have also been moving in the same direction as that of Bitcoin.
Cryptocurrencies became attractive due to the populist idea of wresting control of money from the world’s central banks. Others, however, thought it was an opportunity to make money that’s too good to miss.
“The huge sums lost as a result of cryptocurrency prices falling this year will have triggered a rash of complaints to the FCA,” Andrew Jacobs, a partner at Moore Stephens, an accountancy firm, explained.
Intensifying Regulatory Pressures
He believes the FCA will continue mounting regulatory pressure to “ensure that this market can operate transparently and fairly.” Cryptocurrencies are largely unregulated in many countries.
However, in the UK, the Treasury, Bank of England and FCA have formed a “crypto assets task force”. This is basically to watch the impact on the financial system.
FCA’s Christopher Woolard expressed skepticism about investing in digital assets while speaking earlier his year. He warned that users could “face large losses, be exposed to fraud, struggle to access services or be exposed to the failings of providers such as exchanges.”
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