UK’s apex financial regulatory body FCA has declared that crypto investors will not fall under compensation schemes if they lose invested amounts due to frauds or scams. CEO of FCA Nikhil Rathi issued a statement about the same where he said that cryptocurrency investors need to account for the risk before investing. If something goes wrong, as had happened many times in the past, the government or FCA will be in no way liable for compensations.
Considering the unregulated nature of cryptocurrencies, it does not come as a surprise that the FCA is keeping itself out of compensatory claims. At the same time, the government of the UK has also instructed cryptocurrency exchanges not to market their products aggressively without any statutory warnings.
FCA has a Financial Services Compensation Scheme for those investors who fall for fraudulent schemes and lose money. The FSCS includes investment in stocks, bonds, securities, and other assets. There are many reasons behind the FCA excluding cryptocurrencies from the FSCS. The main reason is that cryptocurrency markets are widely unregulated, both inside and outside the United Kingdom. If investors start claiming recommendations, things will soon go out of hand for the FCA. To avoid confusion, the FCA issued a clear directive stating its inability to compensate crypto investors. Most countries in the world do not have any compensation scheme for crypto investors, and many have lost significant amounts of money to crypto-related financial crimes. However, the judiciary still has the power to order recovery and redistribution of money seized from criminals.