The UK financial regulator is streamlining existing investor compensation schemes. This is due to the rise in cases of cryptocurrency fraud and payments from companies funding compensation.
FCA published
documentreviewing existing compensation systems. According to the document, in the event of bankruptcy of the company, cryptocurrency investors may be denied financial compensation in the UK.
“Investments with high risk, for example, in cryptocurrencies and securities that are not quoted on the exchange, can be excluded from the financial services compensation scheme,” the document says.
Prior to this, the UK Financial Regulator warned users against interacting with many cryptocurrency service companies. The UK National Reporting Center received over 7118 complaints in October. Despite warnings from the authorities, the number of incidents of cryptocurrency fraud increased by 30%. The large number of consumer complaints against bankrupt firms has drawn attention to compensation schemes and heightened frustration among companies paying the industry fees that finance these costs. Traders may be denied compensation, but FCA will protect up to £ 85,000 ($ 112,700) per client.
“Company fees have doubled in a decade to £ 717m. This comes after several investment firms have gone bankrupt and FCA is looking to keep costs down.”
In October, the UK Financial Conduct Authority reported concerns about the growing number of young people in the country investing in cryptocurrencies. The InvestSmart program was launched to increase the level of cryptocurrency literacy. In November, FCA announced a tender to attract specialists who will have to train employees to identify cases of illegal financing.
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