British FCA CEO: Any cryptocurrency-related investor losses should not be compensated

Time:2021-12-31 Source: 847 views Trending Copy share

The Financial Conduct Authority (FCA) is a financial supervision system operated independently by the British government. FCA mainly supervises financial service companies that provide services to consumers, and is given the mission of maintaining the integrity of the UK financial market in the system. FCA's close cooperation agencies include the Supervisory Authority and the Financial Policy Committee, which set regulatory requirements for the financial sector and bring more than 65.6 billion pounds of taxation to the British economy every year.

When asked about the risks of the country’s unregulated cryptocurrency industry in the Finance Committee on Wednesday, FCA Chief Executive Nikhil Rathi stated: We must draw a very clear line when talking about compensation plans. I suggest that any investment related to cryptocurrency should not be compensated, and consumers must be aware of this when investing.

Compensation plan

According to "Cointelegraph", the compensation plan Rathi talked about in the meeting, namely the FCA's Financial Services Compensation Scheme (FSCS), is suitable for assisting when financial institutions cannot meet the compensation required by consumers. The authorized compensation plan paid is mostly used during the period of bankruptcy, crime or insurance default.

This means that the FCA’s rules under discussion will prevent the British government from paying compensation to investors who have suffered from crypto fraud. FCA went on to say that these projects and types of investment are neither regulated nor in a gray area of legal operation.

Speaking of the framework, Rathi said at the hearing that I think the cryptocurrency technology we recognize does have significant benefits and values, such as fighting financial crimes. However, we are still worried about innovation in some areas.

"I think some of these crypto assets do not have intrinsic value. They are part of the activities that promote organized crime and money laundering. Anyone who invests in these objects should be prepared to lose all of their psychological preparation at any time."

FSCS has reached 717 million pounds this year

According to the FCA 6th press release, the overall compensation amount of FSCS has gradually increased since the past 10 years. The compensation has jumped from 277 million pounds in 2011 to 2012 to 717 million pounds in 2021-2022.

The failure of many investment industry companies, financial advisors and individual pension investment operators has also been pointed out as one of the reasons for the repeated increase in compensation plans in recent years.

FCA also stated that as time goes by, it is also committed to reducing the scale of the compensation plan. In order to achieve this effect, the regulator first improves the behavior of the company to reduce the occurrence of damage to solve the main cause of increased liability. FCA has also improved the financial flexibility of the company, so that these companies can provide better liability to the loss party when faced with such problems.

Sheldon Mills, the executive director of consumer and competition affairs at FCA, also expressed the hope that consumers can trust the booming UK financial services industry and convince companies that they can bring more innovative products to the market: and in order to achieve this One goal is that consumers should be provided with appropriate protection measures when they encounter problems. As FCA, we should also find a fair and continuous way to provide adequate funding for consumer protection costs.

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