ecosystem Brianne Rivlin January 12, 2017 10:07 PMJanuary 12, 2017 10:07 PM0 ShareFacebookTwitterRedditLinkedInCancel Consumers have little to virtually no complaints sent to the CFPB about virtual currencies. With the ease of consumer use, this will propel cryptocurrency use and adoption. The mainstream media likes to portray virtual currency as a nefarious actor in the financial world. Juicy stories are found in events that contain corruption and are ladled with jarring headlines to attract viewership. The media has certainly given a lot of attention to virtual currency situations that contain illegal activity. The Mt. Gox and Silk Road cases brought more awareness to Bitcoin but left it in scrutiny and shadows. As an emerging technology, the term Bitcoin has elicited negative connotations from outsiders of the crypto-tech. Since Bitcoins inception, other digitally created currencies have cropped up with virtual currency use increasing despite the negative media attention. Courses on cryptocurrencies are being taught at major universities such as Duke, New York, Princeton, and Stanford. As society gravitates toward a more online, digital-centric world, the use of these currencies may become more customary. Major companies and banks are also creating consortia, such as R3, to look into the underlying technology of cryptocurrencies: the blockchain. With more widespread adoption, data and reporting agencies are documenting its growing use. In August 2014, the Consumer Financial Protection Bureau (CFPB) had released a consumer advisory warning about the risks of virtual currencies and included an announcement that consumers could submit virtual currency related complaints with the Bureau. The CFPB was created to protect American consumers when dealing with consumer financial products and services. The CFPB Director Richard Cordray had stated: Virtual currencies may have potential benefits, but consumers need to be cautious and they need to be asking the right questions. Virtual currencies are not backed by any government or central bank, and at this point consumers are stepping into the Wild West when they engage in the market. The CFPB provides transparency with 689,000 complaints sent to nearly 3,000 different companies that are available for anyone to analyze, and have included virtual currency in the database. Due to this transparency, student loan marketplaceLendEDU has compiled the data and inspected its results for virtual currency complaints, finding: There are virtually zero virtualcurrencycomplaints in the database. In 2016, there were 7 virtual currency complaints out of the 189,098 total complaints. Virtual currency complaints made up 0.0037% of the total number of complaints. Of the 7 total complaints, here is the breakdown byIssue: - 4 complaints filed under Other service issues - 2 complaints filed under Other transaction issues - 1 complaint filed under Fraud or scam In contrast, there were 499 Fraud or scam complaints filed in the database underMoney Transfers. Of the 7 total complaints, here is the breakdown byCompany: - 4 complaints filed against Coinbase - 3 complaints filed against Circle Internet Financial The Executive Director of the Blockchain Education Network, Dean Masley, told LendEDU: Its the reason banks are terrified. Most gateways are very narrowly designed to be very good at that one use case. At any moment I can move all my coin (virtual currency) from one service to another, without any compatibility issues. When you combine a highly competitive global app market with high compatibility and no friction for users, you get very narrow solutions that focus really hard on being good at that one use case. LendEDUs translation of this explanation is that Masley believes consumers are having successful experiences with virtual currency companies due to the high competition and excellent technology for consumers. In short, if virtual currency consumer complaints remain low, adoption and use will be propelled, which will bolster blockchain application solutions. Despite past misuse, virtual currency may take over payment solutions in the future if it continues to prove its innovation. Brianne RivlinBrianne Rivlin has been writing within the internet field for over seven years. During the last few years, she has been heavily influenced by blockchain tech, virtual currencies, and Ethereum. ETHNews is committed to its Editorial PolicyLike what you read? Follow us on Twitter @ETHNews_ to receive the latest Consumer Financial Protection Bureau, LendEDU or other Ethereum ecosystem news. Consumer Financial Protection Bureau LendEDU virtual currency consumer reports

South Korea's national legislature was the site of a public hearing on Tuesday in which recently proposed cryptocurrency regulation saw new discussion. According to local media reports, Korean lawmaker Park Yong-jin used the forum, over which he presided, to call for consumer protections to be added to the bill. Aimed at laying the groundwork for regulation in South Korea, the public hearing comes two weeks after Park first unveiled the plan, which would capture cryptocurrencies such as bitcoin and ether. Panelists in the hearing includes lawyers, professors, an official from South Korea's top financial regulator (the Financial Services Commission), as well as a victim of a cryptocurrency-related Ponzi scam. As such, much of the focus of the talk was on strengthening consumer protections for industry startups and technologists. Park, in particular, voiced concerns that trader protection is a difficult task without a legal basis, stating: "Without a legal framework, we can neither regulate, nurture, nor support the cryptocurrency-related industries. Also, the legal vacuum prevents those who committed virtual currency-related crimes from being punished." Still, there were positive remarks as well. Jung Sun-seop, a professor of law at Seoul National University and director of its Center for Financial Law, argued that the law should legalize cryptocurrencies as a means of payment. Lee Dae-ki, a researcher at the Korea Institute of Finance, argued that the trading and brokering of cryptocurrency should be regulated prior to the currency itself, due to their potential for criminal abuse. Likewise, Chae Won-hee, a representative of a group of Ponzi scheme victims, said the punishment on cryptocurrency-related criminals should be toughened to prevent financial scams. Kim Yeon-june, representing the FSC, said the government had yet to decide whether a cryptocurrency should be brought under financial regulations. Korean national assembly building via Shutterstock The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

The Consumer Financial Protection Bureau (CFPB) has published a set of proposals that could impact cryptocurrency users. Its 870-page report, published 13th November, is largely focused on prepaid debit cards, but some provisions in the document may apply to cryptocurrency wallets too. Regulations may apply to all digital wallets The bureau is still seeking comment on its proposed definition of 'prepaid accounts' and admits that the document remains a work-in-progress. While most of its proposal deals with cards, however, the CFPB notes that it could apply to digital currencies as well: "The Bureau also recognizes that the proposed rule may have potential application to virtual currency and related products and services. As a general matter, however, the Bureau's analysis of mobile financial products and services, as well as and virtual currencies and related products and services, including the applicability of existing regulations and this proposed regulation to such products and services, is ongoing. The proposed rule does not specifically resolve these issues." There are significant variations in the way digital wallets hold funds and process payments, the CFPB states. Most allow users to store their bank account, debit card, credit card or prepaid credit card credentials on mobile devices. Some allow consumers to store funds directly, or by funding a prepaid product that can be used to withdraw funds, it says. CFPB already accepts digital currency complaints The bureau issued an advisory on digital currencies back in August, warning US consumers about the potential dangers of the bitcoin ecosystem. It also began accepting consumer complaints regarding digital currencies. At the time the CFPB told CoinDesk that it was actively working to understand how digital currencies and other emerging technologies affect consumer protections. The bureau said it would continue to carefully monitor the development of digital currencies and take appropriate steps if necessary. Judging by the latest set of proposals, the bureau has not changed its position on digital currencies - they remain under examination. The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Storing personal wealth in bitcoin, or any other cryptocurrency, is clearly revolutionary. So much so, it's going to take a long time for mainstream consumers to actually understand the concepts and potential behind these currencies. One of the areas people should rightly be concerned with is the safeguards that are in place when making purchases with digital currency. The UK's established financial institutions already provide certain guarantees and safeguards against fraud and retail disputes. None of these are currently offered by bitcoin services. Here are some of the services that fiat currencies offer. Hopefully they provide food for thought to bitcoin service businesses. In the UK, we have the Financial Services Compensation Scheme (FSCS), which applies to financial organisations regulated by the Financial Conduct Authority (FCA). Banks covered by this scheme carry a government guarantee that will cover losses up to £85,000. This is per customer, per licence (ie institution), not per account. If your bank goes bankrupt, the government will compensate you up to £85,000. If you have more cash than that, it's probably wise to store it across several banks rather than putting all your eggs in one basket. Other banks in the European Economic Area have a similar guarantee, with a minimum protection of €100,000. That's approximately the same as the UK guarantee, depending on the exchange rate. Debit cards in the UK have a scheme called "Chargeback" to deal with disputed transactions. In the case of damaged goods, or undelivered goods or services, UK debit card users have 120 days to raise a Chargeback claim to reverse the transaction. Chargeback rules between Visa and MasterCard-backed cards may vary. Debit cards have less protection than credit cards as they are not covered under the UK's Section 75 of the Consumer Credit Act. By definition, debit cards do not constitute any form of credit agreement. As mentioned above, credit cards in the UK are covered by Section 75 of the Consumer Credit Act. This means the credit card company is held jointly liable with a merchant for providing goods and services.This also applies to domestic and foreign transactions. The benefit of this comes when a customer and retailer are in dispute, and there is no way for the customer to get a refund when they reach an impasse with the merchant. Section 75 applies to transactions above £100 and below £30,000. However, most credit card companies are now applying the "Chargeback" policy used with debit cards to credit card transactions below the £100 threshold. PayPal has a much more hands-on approach to claiming refunds, and is not subject to Section 75 of the Consumer Credit Act. However, PayPal will honour chargebacks made on transactions that were funded with a credit or debit card. In direct user-to-user transactions (those that didn't involve a credit/debit card transaction), customers must open a dispute. Here, the customer and merchant have to negotiate a solution. If the issue can't be resolved, customers can escalate their dispute to a "claim", which will be investigated by PayPal staff. It's worth bearing in mind that all of this takes time and there are no guarantees that the issue will be resolved in the buyer's favour. The UK has many regulations to ensure trading is fair. There are the Consumer Protection from Unfair Trading Regulations 2008, Distance Selling Regulations and the Supply of Goods and Services Act 1982 to name just a few. While all of these regulations are concerned with what retailers and customers can reasonably expect of each other, none of them directly address transfer of currency. All of the mechanisms of contemporary retail payment systems are possible to implement in cryptocurrencies. The primary difference between credit card and digital currency transfers is that the latter cannot be reversed. Companies like Visa and MasterCard are intermediaries between payer and payee, so they control their own ledgers and can dictate which transactions are upheld and which are not. This model doesn't exist with digital currencies because they're decentralised - no one company controls them - and if they did, the whole system would collapse. Unfortunately, this means no one is there to enforce refunds for unsatisfactory goods or services paid for using digital currency. Those paying for goods and services in cash can also face this problem if they lose their receipt or proof of purchase. Let's say you buy a light bulb from a shop using cash, but you get it home to find it doesn't work. If you don't have a receipt, the shopkeeper could well refuse to give you your money back. Many will, because it's good conduct, so one would hope the same would happen in the digital currency space. In the fifth Core Development Update, published by Bitcoin's lead developer Gavin Andresen, there was mention of a new type of transaction that would have a piece of 80 byte data attached. This would give people the chance to associate their own data with their bitcoin transactions, which could result in a kind of proof of purchase. This would, however, increase the complexity of a transaction, unless a purpose made e-commerce system could automate such a transaction. It's likely intermediaries will be used to improve the safety around consumer spending. These intermediary companies will act as a proxy for all transactions, and will be required to have sufficient reserves to satisfy any disputes that arise. Further to transaction mediation, there is the question of the security. There have been a number of instances over recent weeks and months where bitcoin wallet providers have been hacked and every single Satoshi taken, which has put more than a few people off getting involved in bitcoin. Furthermore, if you are backing up your own wallet you could always lose your keys, like James Howells. Plenty of people distrust the banking system, given recent failings, but a lot of people do - like it or not, banks have a history and a reputation of being a safe place to store funds. Bitcoin is still in its early years, so that trust has to be earned, but for this to happen, it could be that bitcoin 'banks' have to adopt some of the safeguards traditional finance has in place. The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Britain’s financial watchdog issued a dire warning to cryptocurrency traders Monday as Bitcoin took investors on another wild ride.

The UK’s Financial Conduct Authority said consumers who invest in the red-hot cryptocurrency market “should be prepared to lose all their money” because there are so many risks involved.

Firms promoting crypto investments may overstate the returns that traders will reap and understate the risks of the market, and investors who buy in are unlikely to have access to consumer protections if something goes wrong, regulators said.

“Consumers should be aware of the risks and fully consider whether investing in high-return investments based on cryptoassets is appropriate for them,” the agency, known as the FCA, said in the warning. “They should check and carefully consider the cryptoasset business involved.”

Officials also noted that there’s no guarantee digital currencies can be converted back into cash and that their prices are known to swing wildly.

Monday offered yet another example of that volatility as the price of Bitcoin — the world’s largest cryptocurrency — plummeted after a record-breaking rally last week.

Bitcoin was trading at $31,702.83 as of 3:27 p.m., down more than 12 percent from a day earlier and about 24 percent from the all-time high of $41,962.36 that it reached on Friday, according to CoinDesk data.

Other popular coins also suffered heavy losses — Ethereum, the second-largest cryptocurrency by market value, was recently down about 18 percent at $974.46, while XRP was off 8.7 percent at roughly 27 cents.

Institutional investors have helped drive up Bitcoin’s price in recent weeks amid growing perceptions that it offers protection against inflation and could even become an alternative to gold.

But the FCA cast cryptocurrencies broadly as risky, “speculative” investments that could empty retail traders’ pockets given how loosely regulated they are.

“Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money,” the agency warned. “… As with all high-risk, speculative investments, consumers should make sure they understand what they’re investing in, the risks associated with investing, and any regulatory protections that apply.”

CLAMPDOWN on how UK investors can buy bitcoin and other crypto currencies comes into force today, with leading industry players warning it will merely increase the risk to naïve punters lured by their sudden surge in value.

Bitcoin has romped to fresh highs, putting a move by the Financial Conduct Authority first unveiled in October into the spotlight.

The watchdog is banning the sale of certain crypto products such as derivatives to retail investors claiming they are “ill-suited”. The FCA said: “This ban reflects how seriously we view the potential harm to retail investors.”

Since then, as fears about the world economy and the stability of official “fiat” currencies such as the pound and dollar grow, bitcoin has soared. It is up this year from £6000 to more than £25,000, attracting new breeds of investor.

Yesterday JP Morgan said it could quadruple from here, saying it is in competition with gold as a store of value, a serious nudge from the world’s biggest bank.

The FCA clampdown means bitcoin derivatives can no longer be held in ISAs or SIPPs. Nor can they be held alongside other shares in investment portfolios such as ETFs.

Bradley Duke, CEO of crypto firm ETC Group said: “The FCA’s decision means UK based retail investors who want exposure to bitcoin and other cryptoassets will have to manage their own storage, which could increase their risk of losing keys and becoming a victim of cyber-crime. It also removes the ‘safety-net’ for retail investors that is provided by the suitability guidance of investment advisors when assessing the risk appetite and profile of their clients for these regulated products.  Investors who want to gain access to this asset class are now left with less secure ways to invest in Bitcoin.”

Jason Brown at blockchain group Komodo said: “When the ban was passed by the UK government in October, there was no coordination with officials in the US, EU, or any other regions around the world. What the blockchain industry needs the most is consistent regulations across jurisdictions.”

Analysts say that the banned products provide many benefits to investors from diversification to strong potential for long-term growth. 

One noted: "The FCA’s decision makes it harder for retail investors to access this, and those that do may be achieving this through channels and products that are riskier and provide less protection than those being banned.”

Dermot O'Riordan of blockchain investor Eden Block said: “By banning crypto derivatives, the FCA is basically indicating that they don’t know how to regulate this. The FCA has chosen to abdicate rather than lead.”

The watchdog hit back, saying the banned products “cannot be reliably valued by retail consumers”. The FCA notes the “prevalence of market abuse and financial crime” in some of these markets.

It estimates that retail consumers will save around £53 million from the ban on these products.

Sheldon Mills, interim Executive Director of Strategy & Competition at the FCA, said: “This ban reflects how seriously we view the potential harm to retail consumers in these products. Consumer protection is paramount here.

Significant price volatility, combined with the inherent difficulties of valuing cryptoassets reliably, places retail consumers at a high risk of suffering losses from trading crypto-derivatives. We have evidence of this happening on a significant scale. The ban provides an appropriate level of protection.”

The Financial watchdog of the United Kingdom, the Financial Conduct Authority [FCA] on Monday, released a warning for consumers about the investment risk in cryptocurrency.

According to the statement, the focus of the warning was mainly towards crypto-assets and businesses promising high returns. The warning included the FCA stating that the consumers should be prepared to “lose all their money”.

According to the notice:

“Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. If consumers invest in these types of product, they should be prepared to lose all their money. “

Cryptocurrencies have been the boogeyman for the traditional financial authorities, however, the risk warning even within the crypto ecosystem has been clear.

For instance, the largest cryptocurrency Bitcoin had garnered the attention of everyone from the mainstream to the crypto ecosystem as it reached new price levels every day. However, on Sunday, the value of BTC dropped from $41k to as low as $32k. This massive drop has not been witnessed in the BTC market for a long time. This volatile nature of the crypto market has been time and again highlighted.

The FCA thus warned that any issues faced by crypto investors within the country may not be assessed by the Financial Ombudsman Service, which settles complaints between consumers and businesses that provide financial services.

Apart from consumer protection and price volatility, it highlighted other risks associated with “high-return investment based on crypto assets” like product complexity, charges and fees, and marketing material. It added:

“Consumers should be aware of the risks and fully consider whether investing in high-return investments based on cryptoassets is appropriate for them. They should check and carefully consider the cryptoasset business involved.”

Earlier the regulatory body had noted that all the crypto firms based in the country will have to be registered with the FCA in order to comply with regulations. This was stated to be done by 10 January 2021 and operation without registration will be illegal and deemed a criminal offense.

Here’s one way to track Bitcoin corrections

Ethereum, EOS, BAT Price Analysis: 11 January

Namrata is a full-time journalist at AMBCrypto covering the US and Indian market. A graduate in Mass communication, while majoring in Journalism, she writes mainly about regulations and its impact with a focus on technological advancements in the crypto space.

FCA establishes Temporary Registration Regime for crypto firms

The UK-based watchdog is pleading with consumers to be aware of crypto-investment companies enticing people with false-high profits promises. FCA shed light on such Ponzi schemes and encourages investors to do in-depth uncovering research before they settle on investing in any cryptoasset. The watchdog also says that crypto-investment enthusiasts should always be ready to count losses if they decide to invest in such assets.

According to the FCA, cryptoassets are not really under any investment regulations. Therefore, any investment made in them could result in high profits or deafening losses. They strongly suggest companies that boast of high returns are highly likely to be fraudsters and scammers.

The financial regulatory body has aired very undeniable reasons that investors should consider when it comes to the cryptocurrency investment universe. The FCA website clearly states that cryptoasset-related investments are not protected by the Financial Services Compensation Scheme(FSCS). The scheme is meant to protect other financial assets such as shares and fiat currencies kept in banks.

The Financial Ombudsman Service(FOS) is also present under the FCA but is not available in cryptoasset investment. The two significant services, being unavailable for investors looking at the lucrative cryptocurrency highs, spells doom when things eventually go wrong. When a dispute arises or the assets are stolen, there is no mediator to help solve the issue, and investors will get little to no compensation for their losses.

The FCA has been raising awareness on firms that have not registered with them under money-laundering regulation terms. If consumers are lured into blindly purchasing cryptocurrency products from search firms, they are likely getting robbed of their funds.

Bitcoin, the world’s most known cryptocurrency, has recently been on a bullish wave, hitting an all time high of $40K. However, all cryptocurrencies like BTC have highly volatile prices; their prices can drop significantly in seconds. Hence, the price volatility of cryptoassets is a big sign that getting guaranteed high returns is a lie served hot.

FCA urges cryptocurrency investors to counter check all firms advertising cryptoasset investment returns if they are present in the Financial Services Register or list of firms getting vetted by them. They should also note that a temporary listing does not necessarily mean it is safe to invest in the firm. If both of the mentioned cases are not in play, investors should ask whether they are legally operating without FCA’s registration.Upon finding out the company is not operating under any known legal parameters, they should promptly withdraw all their cryptoassets or any currency from the firm. For more info on how to avoid such schemes, they should take their time to visit the FCA’s ScamSmart pages.  

Bitcoin is currently trading at $31,000 (£22,928) per coin compared to $41,500 (£30,694) on January 7.  This move hasn’t reflected wider stock market moves, with global stocks remaining largely flat.

In response Britain’s Financial Conduct Authority (FCA) issued a stark warning about the dangers of investing in cryptocurrencies.

It said: “If consumers invest, they should be prepared to lose all their money.

"Some investments advertising high returns from cryptoassets may not be subject to regulation beyond anti-money laundering.

“Significant price volatility, combined with the difficulties valuing [Bitcoin] reliably, place consumers at a high risk of losses.”

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The FCA warned cryptocurrency investments are unlikely to be protected by the UK’s Financial Services Compensation Scheme or the Financial Ombudsman Service.

Speaking to Sky News Laith Khalaf, who works as a financial analyst at investment firm AJ Bell, warned about cryptocurrency scams.

He said: “You can see how the rapid price appreciation of Bitcoin, combined with aggressive marketing and low interest rates on cash, creates a perfect storm for consumers looking to get a decent return on their money.

“Unfortunately Bitcoin and other cryptoassets are subject to dramatic price falls as well as rises.

READ MORE: Bitcoin price latest - New 2021 target price of '$220,000' per coin

“Consumers should be on high alert for unsolicited communications linked to Bitcoin or other cryptocurrencies and should consider any marketing material with an extremely critical eye.

“They should also make sure any firm they are dealing with is regulated, or at least has temporary permissions from the regulator.”

Bitcoin was launched in 2009 by an unknown individual or group using open-source software.

A digital currency which doesn’t have a central bank Bitcoin works around peer-to-peer exchanges.

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However it has been criticised by some law enforcement agencies following widespread use by criminal groups.

Bitcoin is by some margin the most popular of the digital currencies.

Susannah Streeter, a Hargreaves Lansdown market analyst, said the FCA warning is significant.

She commented: “There is much speculation that bitcoin will become more mainstream, especially with more institutional investors becoming involved, but the future of cryptocurrencies remains highly uncertain.

“Bitcoin's price is being driven primarily by future price speculation rather than an underlying use case.

“The Financial Conduct Authority clearly believes the crypto Wild West could be running out of control, and is warning that consumers risk losing all their money if they succumb to promises of fast and high returns.”

As a result of its volatility and lack of transparency there have been calls for Bitcoin to be closed down.

Nobel Prize winning economist Joseph Stiglitz, former World Bank chief economist, made this argument in 2019.

Speaking to CNBC he said: “I actually think we should shut down the cryptocurrencies.”

Mr Stiglitz argued cryptocurrencies transfer money “from a transparent platform into a dark platform”.

(Bloomberg) — European Union policy makers should consider whether specific rules are required for crypto assets, which currently fall outside the scope of financial-services regulations and pose potential risks to consumers, according to the bloc’s top banking regulator.The European Banking Authority recommended that the European Commission, the EU’s executive arm, carry out further analysis to determine the how to respond to a market that’s now valued at about $140 billion. The EBA made the comments in a report on the suitability of current EU rules to a raft of digital assets that includes blockchain currencies like , as well as tokens that provide access to a good or service.Having initially paid little attention to digital assets, the staggering rally in Bitcoin and many other tokens in 2017 and their subsequent fall to earth in 2018 have thrust digital assets into the crosshairs of regulators. While some jurisdictions have courted the nascent digital assets industry, others have been outright hostile.A situation where most activities related to crypto assets are deemed to be outside the scope of current rules poses risks to consumer protection, operational resilience and market integrity, the EBA said in the report published on Wednesday.The EBA’s comments are similar to those made last year by U.K. lawmakers, who said cryptocurrencies and most initial coin offerings are not covered by the U.K.’s Financial Conduct Authority, so investors are typically not protected and have no opportunity for redress.Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible. Where should I invest a lumpsum of Rs 7 lakh for 10 years?Major cryptocurrency payment service provider BitPay has reported $1 billion in transactions this past year, according to a press release Jan. 16. According to the report, the company also set a new record for itself […]© Reuters. Bitcoin was lower on Thursday. Investing.com – and other digital assets turned bearish on Thursday, taking the total market cap to its lowest value since November 2017. Bitcoin slumped down 4.32% to an […]© Reuters. Bitcoin fell on Monday. Investing.com – Cryptocurrencies fell on Monday, while eased from a two-and-a-half-week high as an academic study found that Tether does not impact its price. Bitcoin decreased 1.56% to $6,630.30 […]The Public Provident Fund (PPF) account has a lock-in period of 15 years. Funds credited to the account can be accessed only at the end of that period. However, partial withdrawals are possible subject to […]Not many investors know whether they have invested in the right funds and if their fund portfolio is on track. The Portfolio Doctor assesses the health of the fund portfolio, examines the schemes and their […]

Fresh from enacting its ban on the sale of crypto derivatives to retail traders, the U.K. Financial Conduct Authority (FCA) has issued new warnings about crypto investments to consumers. Meanwhile, commercial banks in the country are adopting a more anti-cryptocurrency stance refusing to accept deposits from virtual currency sources even as the government appears set to create a regulatory framework for digital assets and stablecoins in the wake of its post-Brexit fintech revamp.

In a communique issued on Monday (Jan. 11, 2021), the FCA advised consumers to be wary of firms advertising crypto high yield investment programs (HYIPs). According to the U.K. regulatory watchdog, investments in these assets comes at the risk of significant losses.

An excerpt from the FCA’s notice reads:

“As with all high-risk, speculative investments, consumers should make sure they understand what they’re investing in, the risks associated with investing, and any regulatory protections that apply.

The U.K. financial regulator also urged investors to be cautious of firms that contact them “out of the blue” promoting crypto investments. According to the press release, consumers should always check the FCA website to see if such companies are included in its blacklist of known con artists.

Back in Feb. 2020, the FCA introduced new rules for crypto businesses, expanding its regulatory remit over the U.K.’s cryptocurrency scene. These rules which came into force on Jan. 10, 2021, mandates that all crypto firms in the U.K. must be registered with the regulator.

In Dec. 2020, the FCA extended the consideration period for crypto firms that have already applied for an operating license. At the time, the move was necessary to provide additional time for the regulator to process the backlog of pending submissions.

Monday’s warning is coming days after the FCA’s ban on retail crypto derivatives trading came into the effect.

On the one hand, the government says it is looking at the creation of clear-cut regulations for the cryptos and stablecoins. As previously reported by BTCManager, Her Majesty’s (HM) Treasury has called for public opinion on its planned cryptocurrency regulatory framework that includes exemptions for Bitcoin and utility assets from stringent legal compliance standards.

However, U.K. banks are reportedly prohibiting customers from depositing profits from crypto trading. According to reports, some banks are wary of accepting transfers from crypto exchanges over money-laundering fears.

With anti-money laundering (AML) protocols being part of the Treasury’s proposed crypto rules, this situation might be resolved once the planned regulations become law.

The UK’s financial regulator has recently issued a warning against crypto trading and investing. The country’s financial watchdog stressed the high risks and dangers of using cryptocurrencies, and particularly seeking to profit from the recent crypto rally, which brought increased volatility.

The UK has not been one of the crypto-friendliest countries in the world thus far, and it appears that the situation will not change anytime soon. The country has already seen a number of its banks ban users from transferring money to and from crypto exchanges via their services, with HSBC bank being the most recent one to do so.

Meanwhile, the authorities continue to insist on the dangers of trading digital currencies. The UK regulator, the FCA (Financial Conduct Authority), stressed that crypto traders and investors could lose everything.

The regulator issued a new statement earlier today, January 11th, stressing that “Investing in crypto assets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. If consumers invest in these types of product, they should be prepared to lose all their money.”

As mentioned, the FCA seems to be focusing on the great price volatility that the crypto industry has exhibited over the last several weeks. However, it is also concerned about the lack of regulation focused on protecting consumers, as well as the complexity of the offered products.

The great volatility can refer to pretty much any crypto asset, but it is clear that Bitcoin is the biggest “threat.” The coin’s price recently skyrocketed past $40,000, hitting an ATH at $41,941.

Since then, the world’s largest coin saw a significant correction which currently has it at $34,953. As for the complexity of assets, that might also refer to another cryptocurrency, XRP. The former third-largest crypto asset was recently sued by the US SEC for being a security, while masquerading as a utility.

Meanwhile, its creator, Ripple Labs, was accused of deceiving investors, which caused it to lose a number of supporters. At the same time, major exchanges have already announced plans to delist XRP in the next few days.

The United Kingdom's financial regulator, the Financial Conduct Authority, has posted a warning about cryptocurrency investment amid a major crash in crypto markets.

In a Monday statement, the FCA said that crypto investment and lending are associated with a high level of risk, stressing that investors should be ready to lose all their money while investing in crypto.

Citing a number of risks including price volatility, product complexity, and charges and fees, the FCA said that investors are taking charge of crypto-associated risks:

The regulator also stated that crypto investors are unlikely to have access to major consumer protection institutions like the Financial Ombudsman Service or the Financial Services Compensation Scheme if something goes wrong.

The FCA noted that companies offering crypto-related services should make sure that they comply with all relevant regulatory requirements and are authorized by the FCA. As of Sunday, all U.K.-based crypto-asset firms must be registered with the FCA under regulations to tackle money laundering, the agency wrote. “Operating without a registration is a criminal offence,” the FCA added.

The latest crypto market crash is not exclusive to Bitcoin, as all top 10 cryptos by market cap have posted major losses, with altcoins like Ether (ETH) dropping nearly 19%. 

The U.K. Treasury has released a consultation paper to gather feedback from stakeholders concerning the government’s regulatory approach to cryptocurrencies and stablecoins.

The consultation solicits opinions on how the U.K. can make sure its regulatory framework is “equipped to harness the benefits of new technologies, supporting innovation and competition, while mitigating risks to consumers and stability,” and incorporates advice from the Cryptoassets Task Force.

With a large proportion of crypto assets falling outside regulatory oversight, the Treasury says they may pose a risk to consumers and lack financial safeguards.

The U.K. is planning a “a staged and proportionate approach” to new crypto asset developments, taking a focus in the paper on stablecoins – cryptocurrencies that generally aim to have a stable value by being backed by assets such as the U.S. dollar.

“[T]he landscape is changing rapidly. So-called stablecoins could pave the way for faster, cheaper payments, making it easier for people to pay for things or store their money. There is also increasing evidence that [distributed ledger technology] could have significant benefits for capital markets, potentially fundamentally changing the way they operate,” said John Glen, M.P., the Treasury’s economic secretary, said in the paper’s introduction.

However, he said, such developments could “pose a range of risks to consumers and, depending on their uptake, to the stability of the financial system.”

The consultation focuses particularly on developing a “sound regulatory environment” for stablecoins, which the U.K. government considers have most “urgent” risks and opportunities.

Since the announcement of the Facebook-backed libra project (now rebranded as diem), regulators and governments worldwide have raised concerns over the potential effects of so-called global stablecoins on financial stability and even monetary sovereignty.

The U.K.’s Financial Conduct Authority has already issued guidance on crypto assets – including “exchange tokens” like bitcoin, ether and XRP – setting out which do and don’t fall under its jurisdiction in July 2019.

This new consultation will focus on the roles of crypto assets and stablecoins in payments and investment, as well as the use of blockchain or distributed ledger technology in financial markets. It will also look at additional regulatory actions that might be required in the space.

Read more: UK’s FCA Warns Investors of High-Risk Crypto Investments and Scams

The paper marks the second Treasury-led crypto consultation. The first, announced last summer and concluded in October, set out plans to increase oversight into cryptocurrency promotions in order to protect investors. The results will be published “in due course,” the Treasury said in the new paper.

The FCA recently banned the sale of derivatives and exchange-traded notes, saying it considers the products to be ill-suited for retail consumers due to the potential harm they pose.

Responses to the consultation paper are being accepted until March 21.

Bitcoin prices as of 5pm GMT on Monday are hovering around the $30,787 (£22,764) mark, according to the latest CoinDesk data. Bitcoin has therfore lost more than $10,000 – more than 25 percent of its value, since Sunday morning GMT – an unexpected pullback after recent rallies saw BTC skyrocket past £30,352 ($41,269) for the first time in 12 years. The plunge comes amid warnings from the Financial Conduct Authority (FCA) about the risks of investing in cryptocurrency.

The UK-based regulatory body said on Monday investing in crypto assets "involves taking very high risks with investors’ money".

The FCA added: "If consumers invest in these types of product, they should be prepared to lose all their money."

Bitcoin has been rallying since October 2020 with prices soaring by a staggering 300 percent.

Analysts, however, warned the crypto market was due a correction.

READ MORE: Bitcoin price rise: Will Bitcoin keep rising? Why is BTC soaring?

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And on Monday the cryptocurrency market's capitalisation fell from about £880billion ($1.1trillion) to about £725.16billion ($978.22billion), according to CoinMarketCap data at 10.19am GMT

The three leading cryptocurrencies, bitcoin, ethereum and tether, are all down on the last 24 hours.

Naem Aslam, the chief market analyst at Avatrade, said the weekend's plunge is a "healthy correction".

He predicts BTC will find some stability between the £20.76K and £22.2K ($28K and $30K) mark.

Simons Chen, executive director of investment and trading at the Hong Kong-based Babel Finance, also said: "The correction we saw was expected as we believe the BTC price surge recently from under $20,000 to $40,000 in the past four weeks will induce sell pressure."

However, not all crypto players seem concerned about the price dip.

David Schwartz, chief technology officer at Ripple, tweeted: "Wow, *huge* bitcoin crash.

"Prices have fallen all the way down to yesterday's levels."

Bitcoin has proven on past occasions to be a volatile financial option, with some experts calling it a bubble waiting to burst.

Economist David Rosenberg, president of Rosenberg Research, said earlier this month: "The parabolic move in bitcoin in such a short time period, I would say for any security, is highly abnormal."

The Bank of America’s chief investment strategist has also warned of the "mother of all bubbles" in the growing bitcoin market.

Michael Hartnett of the Bank of America Securities said on Friday bitcoin "blows the doors off prior bubbles", although he did not say BTC would crash like other bubbles of the past.

December 2017 infamously saw bitcoin crash after skyrocketing to just under $20,000 (£14,825) and then falling to about £2,222 ($3,000).

According to the FCA, there are a number of reed flags involved in crypto investments.

The financial watchdog warned against misleading marketing surrounding cryptocurrencies, a lack of consumer protection and volatile prices that create a high-risk scenario for investors.

The FCA said: "As with all high-risk, speculative investments, consumers should make sure they understand what they’re investing in, the risks associated with investing and any regulatory protections that apply."

Some investors, however, are bullish about bitcoin's prospects in the coming months to years.

One expert predicted BTC could surpass the $74,128 ($100,000) mark in the next two to three years.