The UK’s Financial Conduct Authority (FCA) yesterday released data that shows a 222% increase in inquiries about scams relating to cryptocurrencies between the months April 2020 and March 2021.
In April 2020, the British regulator received a total of 176 inquiries relating to possible cryptocurrency scams. By March 2021, this number had increased to 566.
Part of this increase, the FCA suggests, may be due to the changing characteristics of investors and their investment decisions.
“Younger people are twice as likely to have invested in high-risk investments than adults overall. For example, 44% of cryptocurrencies and 31% of crowdfunding investments are held by people under 34,” the FCA said.
With these newly published figures in mind, it is perhaps not surprising that the regulator has taken a critical stance against the crypto industry.
The FCA and crypto
During the last year, the FCA has taken a consumer protection-focused approach to cryptocurrencies.
In January of this year, the FCA issued a public warning for consumers about the risks involved in cryptocurrency investments.
“Investing in crypto assets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. If consumers invest in these types of products, they should be prepared to lose all their money,” the regulator said at the time.
The FCA further unpacked the five risks it identified in crypto assets. First and second were a lack of consumer protection and price volatility, which could place consumers “at a high risk of losses.”
In addition, the the regulator listed product complexity, charges and fees, and misleading marketing materials as risks inherent in crypto assets.
“Consumers should be aware of the risks and fully consider whether investing in high-return investments based on crypto assets is appropriate for them,” the FCA added.
Since, the FCA has taken aim at Binance Markets Limited (BML), a Binance-acquired company put in place to own and operate what would be a bespoke crypto exchange for UK customers. Following a consumer warning against BML published in June, the FCA doubled down in August, claiming the firm was not capable of being regulated.