The number of complaints relating to crypto assets received by the U.K.’s Financial Conduct Authority (FCA) has risen sharply during the 2018 bear market.
People rarely call foul play during a bull market. When the charts are all green, who really cares if a project FOMO’d into last November after hearing that it was going to decentralise “X” industry, which is on time with their road map updates or is developing as they promised to during their ICO ?
However, as figures from the FCA reveal, the bear market is causing those burned by too-good-to-be-true startups promising the earth last year and delivering very little in 2018 to kick up a fuss.
According to a report in the U.K.’s Telegraph newspaper, the financial watchdog is currently investigating 50 firms believed to be operating without a full licence from the organisation. In May this year, the figure was just 24. Additionally, the FCA stated that there had been a total of seven employees from various firms involved in the cryptocurrency market who had blown the whistle on companies this year. This compares to no reported incidents of similar in the previous three years.
A partner at Moore Stephens accountancy firm, Andrew Jacobs, told the publication about the increasing numbers of complaints the FCA has received during the bear market:
“The huge sums lost as a result of cryptocurrency prices falling this year will have triggered a rash of complaints to the FCA. Now that prices have collapsed, fraud is likely to be exposed, with greater pressure coming to bear on the FCA to ensure that this market can operate transparently and fairly.”
Increasing Complaints Coincide with Renewed Warnings from FCA
Just last month Christopher Woolard, a board member of the FCA gave a speech at the Regulation of Cryptocurrencies event in London. He focused on the cryptocurrency phenomena in general, the risks posed to the investors and financial stability, and the FCA, Bank of England (BoA), and Treasury “cryptoassets taskforce,” which made its final report in October.
During the address, Woolard noted the transformation that the space has undergone in the last 10 years, observing that where once there was only Bitcoin, now a sprawling mass of over 2,000 (largely useless) crypto coins and tokens exist.
He then focused on the task force set up between the FCA, the HM Treasury, and the BoA. The idea of the venture is to explore the likely impact on society and the economy of blockchain-based systems and cryptocurrencies more generally.
In concluding, Woolard acknowledged that there were certainly instances of crypto coins and tokens being useful. However, the task force found that the space invited new risks of financial crime and to consumers. Woolard stated:
“Consumers may buy unsuitable products, face large losses, be exposed to fraud, struggle to access services or be exposed to the failings of providers such as exchanges.”