‘Nation should not compensate investors for crypto losses’ says UK’s Financial Conduct Authority CEO

UK’s top financial watchdog wants to bar investors from accessing government compensation in the event of crypto scams or not-at-fault financial loss.

On Wednesday, Nikhil Rathi, CEO of the United Kingdom’s Financial Conduct Authority, or FCA, issued the following statement to the Treasury Committee when asked about the risks of the much-unregulated cryptocurrency sector in the country:

When we talk about the compensation scheme, we have to draw some pretty clear lines. I would suggest anything is crypto-related should not be entitled to compensations, and consumers should be clear about that when investing. 

In the passage, Rathi refers to the FCA’s Financial Services Compensation Scheme, or FSCS, which pays out compensation to consumers when certain authorized financial institutions cannot meet claims against them, such as during bankruptcies, criminal schemes or insurance breach-of-contract. In theory, the proposed rules would prevent U.K. government from paying restitution to crypto investors who have been scammed by allegedly fraudulent cryptocurrency exchanges or decentralized finance rug pulls, as these types of investments are either unregulated or operate in legal grey areas. More than 717 million pounds were paid out to consumers this year by the FSCS in compensation for their financial loss.

Nikhil Rathi speaking at the Treasury Committee hearing | Source: parliamentlive.tv

“There are technologies underpinning cryptocurrencies, which, I think we would recognize, as having significant benefits and value, such as tackling financial crimes. A number of innovations, however, we have raised concerns around,” said Rathi when asked about the country’s regulatory framework. “Some of these crypto-assets, we don’t believe have intrinsic value. They have been a part of a series of organized crimes and money laundering, and anyone who invests in them must be ready to lose all of their money.”

Crypto Exchange Binance Is Making ‘Substantial Changes’ to Become ‘Fully Licensed and Fully Compliant’ in UK

Crypto Exchange Binance Is Making 'Substantial Changes' to Become 'Fully Licensed and Fully Compliant' in UK

Cryptocurrency exchange Binance has unveiled its plan to become a “fully licensed and fully compliant” exchange in order to serve users in the U.K. The crypto exchange is reportedly “making a number of very substantial changes” in the way it operates in order to comply with the country’s regulator, the Financial Conduct Authority (FCA).

Binance Plans to Launch a Fully Licensed Crypto Exchange in the UK

Binance is working to become a fully licensed and fully compliant cryptocurrency exchange in order to launch in the U.K. where it recently ran into trouble with the Financial Conduct Authority (FCA).

The exchange’s CEO, Changpeng Zhao (CZ), said in an interview with The Telegraph that Binance will reapply for a license with the FCA. He believes that his exchange’s relationship with the British regulator has improved. He told the news outlet:

We’re fully re-engaged there … We’re making a number of very substantial changes in organizational structures, product offerings, our internal processes, and the way we work with regulators.

The U.K. Financial Conduct Authority issued a consumer warning on Binance in June stating that no entity “in the Binance Group holds any form of U.K. authorization, registration or license to conduct regulated activity in the U.K.” In August, the FCA said that Binance was no longer in violation of its rules but noted that the company has not applied for a license to operate a crypto exchange.

“We want to continue to establish a presence in the U.K. and serve U.K. users in a fully licensed and fully compliant manner,” Zhao emphasized, adding that Binance hopes to become a registered crypto asset firm in six to 18 months.

Following the warning by the FCA, several major banks in the U.K. began restricting payments to Binance, including Barclays, HSBC, Natwest, and Santander.

Besides the FCA, a number of other regulators have issued warnings of various kinds about Binance, including regulators in the U.S., South Africa, Singapore, Australia, Norway, Netherlands, Hong Kong, Germany, Italy, India, Malaysia, and Lithuania. In August, Binance said it was making regulatory compliance its top priority.

Zhao further shared with the publication that when regulators asked Binance “a very simple question: ‘Where’s your headquarters?’ and our response was that we have no headquarters, that we’re a decentralized organization, they didn’t know how to work with us.” The CEO concluded:

We understand that now. So now we’re in the process of setting up real offices, legal entities, a proper board, proper governance structures in most places, including the U.K.

What do you think about Binance launching in the U.K. after regulatory trouble with the FCA? Let us know in the comments section below.