The U.K. financial markets regulator has ordered all unregistered digital currency firms to shut down and refund their investors. The Financial Conduct Authority (FCA) cautioned such companies that continuing their activities would attract criminal and civil enforcement actions. The warning came alongside a reminder to investors that they risk “losing all their money” when they invest in digital currencies.
In an email to digital currency companies, the watchdog warned that all firms that had not applied to register with it by December 15 must cease all their activities. The January 8 email, which was obtained by The Block, urged all companies to consider all the relevant issues carefully. Where possible, they must return any money or digital currencies to the investors.
Any digital currency firm operating in the U.K. must have registered with the FCA for anti-money laundering and counter-terrorist financing purposes by January 9, 2021, the email stated. It continued:
“If you are an existing cryptoasset business that is still carrying on cryptoasset activities in the U.K. and fall within either of the categories mentioned in the bullet points above, you are required to cease such activities before 10 January 2021.”
The regulator had set its temporary registration regime deadline for January 10 this year, one year since it took over as the AML and CFT oversight body for digital currency firms. However, as CoinGeek reported, the watchdog extended this deadline to July 9. This extension allows the FCA to adequately review all outstanding licensing applications from digital currency firms.
In its recent email, the FCA warned digital currency firms, “You should seek your own legal advice on how to do this. You may be committing a criminal offence from 10 January 2021 if you continue to provide services involving cryptoassets. If so, you are at risk of being subject to the FCA’s criminal and civil enforcement powers.”
The email came alongside a public warning to investors against investing in digital currencies. “If consumers invest in these types of product, they should be prepared to lose all their money,” the warning claimed.
Consumers must understand what they are investing in, the risks it carries and any regulatory protections that apply, the watchdog wrote. It also reminded investors that they are unlikely to have access to the Financial Ombudsman Service for digital currency-related investments.
It cited price volatility, product complexity, deceitful marketing materials and higher charges and fees as some of the risks consumers must be aware of before investing in digital currencies.