UK supervisor the Financial Conduct Authority (FCA) has noted a marked increase in reports about possible cryptocurrency scams.
The findings are contained in its third Consumer investments data review, which gives an overview of work to protect consumers from investment harm in the 6 months between April and September 2021.
Of the scam enquiries received during the period, 3,006 related to cryptocurrencies. This compares with 2,645 over the previous 6-month period (a 14% increase).
According to FCA, there were increases in reports about potential crypto scams both to its Supervision Hub (up 14% on the previous 6 months) and its ScamSmart website (up 49%).
The regulator added that its Cryptoasset team in Supervision opened over 300 cases relating to potential unregistered cryptoasset businesses in this period, many of which are likely to be involved in scams. During the same period, it also added 172 firms to its Unregistered Cryptoasset Businesses list.
The Cryptoasset Supervision team is responsible for supervising cryptoasset firms’ compliance with the Money Laundering Regulations (MLRs). The team is responsible for identifying, managing and mitigating risks of potential harm arising in active and registered firms.
This includes rapidly intervening where firms are at risk of being used as conduits for illegal activity, or where firms pose harm to consumers or market integrity, for example operating without registration, perpetuating scams, fraud or high-risk activities.
Commenting on the findings, Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said: “Instead of just flashing the warning lights about the number of consumers being lured into risky crypto investments and scams, the financial watchdog is now getting a lot tougher on stopping suspect firms from entering the market. A quarter of applications from firms wanting to join the consumer investment market are being stopped by the FCA, up from one in five during the last financial year.”
“By showing it’s increasingly on the prowl for scammers and fraudsters, the regulator is clearly hoping to deter more rogue actors from trying to entice vulnerable people into get rich quick schemes. Over the past six months, it’s opened 300 cases into crypto businesses not registered with the FCA and has 50 live cases ongoing into unauthorised businesses which could result in criminal proceedings.”