U.K. Financial Watchdog FCA Opens Investigation Into 24 Crypto Firms


The Financial Conduct Authority (FCA) just opened 24 different investigations into the crypto-based businesses. Responding to a Freedom of Information request, the regulator also confirmed that seven whistleblower reports had been opened relating to cryptocurrency businesses so far in 2018.

The disclosure comes as global regulators begin to clamp down on the freewheeling cryptocurrency industry, which raised billions of dollars last year through the novel fundraising method of initial coin offerings, crowdfunding with little, if any, protection for investors. US regulators have brought fraud charges over a number of ICOs.

Earlier this year, the FCA chairman John Griffith warned that cryptocurrencies would cause consumer harm if not regulated. FCA does not regulate digital currencies but it has purview over cryptocurrency derivatives because they are classified as financial instruments. ICO has been sort of a grey area and has to be regulated on a case-by-case basis.

In the response about whether the unauthorized firms should have sought approval from the FCA, the regulators said:

“If we conclude that they are, then we may investigate and take action, identifying and determining the most serious matters which pose the greatest risk to consumers.”

The FCA was cautious in pointing out that not all digital currencies fell under its jurisdiction. Only those who did could face criminal prosecution as well as insolvency proceedings. Last month, it was reported that the FCA would be collaborating with the U.K. Treasury Committee and the Bank of England (BoE). The three bodies would draft a discussion paper that explored the risks and opportunities presented by the emerging digital asset class.

Notably, British banks have remained wary of getting associated with cryptocurrencies, in part because of the difficulty of conducting KYC and anti-money laundering checks on transactions. However, Barclays broke the norms to open the UK account for Coinbase, the US-based cryptocurrency wallet, and exchange service.

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