The Financial Conduct Authority (FCA) has reminded the British of the “very high risk” associated with investing in some crypto assets, including non-fungible tokens (NFTs).
City regulators say they are aware of social media posts that encourage investment related to digital collectibles, which generally involves taking very high risks with investor money. Has issued a statement. The FCA warns that criminals are looking for ways to exploit new technologies, which could lead to speculative transactions, money laundering and illegal financing.
In addition, the FCA reminded the general public that NFTs may not be regulated beyond the requirements to prevent money laundering. This, as is often the case in the crypto world, means that consumer security is not guaranteed.
Industry estimates indicate that the NFT market will reach $ 40 billion by the end of this year and could exceed $ 100 billion by 2025. As a result, the growing popularity of NFTs has raised concerns among regulators around the world. Last month, both China and Hong Kong warned about financial risks associated with non-fungible tokens (NFTs) and the Metaverse.
The British have also been warned that digital scammers will not fall into the scam of using fake celebrity nominations to facilitate investment. One of the reasons for this is the growing use of social media websites, especially dummies who are more likely to rely on Facebook and Twitter for investment tips.
Britain strengthens cryptocurrency grip
In that warning, the FCA also highlighted other concerns such as consumer protection, price volatility, product complexity, fees and fees, and marketing materials.
Regulators also warned that NFT investors are unlikely to have access to financial ombudsman services or financial services compensation schemes in the event of any problems.
Since January 2021, City Watchdog has been the supervisor of money laundering prevention and counterterrorism financing for the UK crypto asset company. At that time, FCA started a cryptocurrency company registration scheme. The first deadline was one year.
Meanwhile, the UK government plans to tighten rules on crypto advertising that can be considered misleading. Exchequer proposes to include the promotion of crypto assets within the scope of FCA’s existing monitoring, rather than creating a new framework specifically for these products.
Providing the FCA with the authority to regulate the promotion of certain types of crypto assets for the first time is the quickest way to do this and eliminate misleading ads.