‘Nation should not compensate investors for crypto losses’ says UK’s Financial Conduct Authority CEO

On Wednesday, Nikhil Rathi, chief executive of the UK Financial Conduct Authority, or FCA, issued the following statement to the Treasury Committee when asked about the risks of the cryptocurrency sector, which is not regulated, in the country. :

When we talk about the compensation scheme, we have to draw some pretty clear lines. I would suggest that anything related to crypto should not be entitled to offsets, and consumers should be clear about this when investing.

In the passage, Rathi refers to the FCA Financial Services Compensation Scheme, or FSCS, which pays compensation to consumers when certain licensed financial institutions are unable to fulfill claims against them, such as during bankruptcies, criminal schemes. or breach of insurance contract. In theory, the proposed rules would prevent the UK government from paying a refund to crypto investors who have been scammed by allegedly fraudulent cryptocurrency exchanges or decentralized financial carpet pulls, as these types of investments are not regulated or operate in areas legal grays. This year, the FSCS paid more than 717 million pounds to consumers in compensation for their financial losses.

Nikhil Rathi speaking at the Treasury Committee hearing | Source: par Parliamentlive.tv

“There are technologies that underpin cryptocurrencies, which, I think we would recognize, have significant benefits and value, such as addressing financial crime. However, we have expressed concerns about a number of innovations,” Rathi said when asked about the regulations of the cryptocurrency. country. structure. “We do not believe that some of these crypto assets have intrinsic value. They have been part of a series of organized crime and money laundering, and anyone who invests in them must be willing to lose all their money.”