Some crypto investors hope to 'HODL' their assets 'to the moon'. However, the FCA has once again confirmed that, like oxygen, there will be no consumer protection for cryptoasset investors on the way to, or at, their lunar destination.
The FCA states that it 'does not have consumer protection powers for the cryptoasset activities of firms. Even if a firm is registered with the FCA, it is not responsible for making sure cryptoasset businesses protect client assets (ie customers’ money), among other things. Cryptoassets are considered very high risk, speculative investments. If consumers invest in cryptoassets, they should be prepared to lose all their money. It is unlikely that you will have access to The Financial Ombudsman or Financial Services Compensation Scheme, irrespective of whether a firm has temporary or full registration.'
This reminder comes as the FCA announce that they are 'extending the end date of the Temporary Registrations Regime (TRR) for existing cryptoasset businesses from 9 July 2021 to 31 March 2022'. This extension intends to allow cryptoasset firms to continue to carry on business while the FCA continues with its robust assessments.
However, the aim of the TRR is to prevent money laundering and terrorist financing (not consumer protection).
Should this deter crypto investors? Is this all just 'FUD' or is more consumer protection needed?
Even if a firm is registered with the FCA, it is not responsible for making sure cryptoasset businesses protect client assets (ie customers’ money), among other things.