The Financial Conduct Authority (FCA), UK’s chief financial watchdog, has issued a warning over crypto exchange FTX’s business into the country’s regulated financial sector.
FCA Issues Warning on FTX Operations Without Authorization
The FCA has issued a warning to the Bahama-based crypto exchange FTX, stating that it operates without authorization. The firm has joined a growing list of unregistered cryptocurrency-related companies that surpass those registered with the FCA.
According to a September 16 warning note, the company “may be providing financial services or products in the UK without authorization.” The FCA warns potential clients that “if things go wrong,” they will not be able to get their money back or seek protection under the Financial Services Compensation Scheme.
The number of crypto firms registered with the FCA reached 37 at the end of August, with Crypto.com being the most recent to join. eToro UK, DRW Global Markets LTD, Zodia Markets (UK) Limited, Uphold Europe Limited, Rubicon Digital UK Limited, and Wintermute Trading LTD were among the other companies that successfully completed the registration process in 2022 to obtain Money Laundering Regulations approval.
Although it is unclear what the immediate effects for unregistered firms will be, the FCA is far from a vegetarian when it comes to enforcement. On September 13, one of the major electronic payment companies in the United Kingdom, ePayments, ceased its operations three years after it received a similar order from the FCA owing to alleged inadequacies in its “financial crime controls.”
FTX has expanded to Europe after getting approval from the Cyprus Securities and Exchange Commission (CySEC), but the FCA thinks the exchange’s offering is cause for serious concern.
The warning is issued despite the fact that FTX Europe has the legal authority to offer its products to clients within the European Economic Area. The European venture is based in Switzerland, with a regional office in Cyprus.
UK Cracks Down on Crypto Space
Since January 2020, the City watchdog has become the anti-money laundering and counter-terrorist financing regulator of UK crypto asset companies. At the time, the FCA initiated a registration scheme for crypto-asset companies with an initial one-year deadline.
However, nearly 70 crypto firms withdrew previously submitted applications for registration as the nation tightened its control of the industry. By withdrawing their applications, these firms were forced to suspend operations in the UK, despite the fact that more than 200 companies are still being reviewed by the FCA.
Meanwhile, the UK government intends to tighten regulations on crypto advertising that may be considered misleading. The Exchequer proposes to bring the advertising of crypto-assets under the FCA’s existing oversight, as opposed to establishing a separate framework specifically for these products.
In its first big intervention in the nascent industry, the City watchdog has already outlawed the sale of crypto-based derivatives. The ban prohibits the sale of derivatives based on cryptocurrency prices, such as CFDs, options, and futures, to retail investors.