Cryptocurrency investors may be excluded from the Financial Services Compensation Scheme (FSCS) in the UK. A proposal from the Financial conduct authority (FCA) is submitted for public consultation.
The Financial Services Compensation Scheme (the FSCS) is the UK’s statutory compensation scheme for financial services. It steps in to protect consumers when certain authorized financial services firms are unable, or likely to be unable, to meet civil claims against them. Bringing a claim to the FSCS is free to consumers, and it plays a critical role in both protecting consumers and ensuring confidence in financial services markets.
The document says (Read Document In Detail Below):
“The FSCS can focus on core products that are more likely to meet the needs of ordinary investors. Non-core instruments such as crypto assets, unlisted securities, or unregulated collective investment schemes, under certain circumstances, can be excluded from the protection of the FSCS.”
The scheme is funded by participating companies, so FCA is committed to keeping costs down. According to the document, over the past ten years, aggregate fees have tripled – from $312 million to $951 million per year. The regulator also questions the right of wealthy or seasoned investors to seek compensation.
FCA intends to collect public opinion by March 4, 2022. FCA stressed that following the consultations, some proposals may be rejected.
FCA has repeatedly warned about the risks of investing in cryptocurrencies. In September, chief executive Nikhil Rati said that crypto investors “must be prepared to lose all their money.” The UK Financial Conduct Authority also launched the InvestSmart program to educate inexperienced UK investors about the risks of investing in cryptocurrencies. In September, the FCA warned of increased regulation for the crypto industry.
Read FCA document: