The U.K.’s Financial Conduct Authority (FCA) is unable to create a regulatory framework for crypto investors that could protect them from losses, agency CEO Nikhil Rathi told the Treasury Select Committee in an inquiry session on Wednesday.
The country’s financial regulator, the FCA currently has powers to ensure crypto companies register and comply with anti-money laundering rules, but it doesn't have the ability to protect consumers from any losses they might suffer. While the Financial Services and Markets Bill that’s currently under debate in parliament and is expected to become law in April will give the FCA more power to regulate crypto, consumer loss protection won’t be included.
“Whatever we do on regulation, we are not going to be able to put in place a framework that protects consumers from losses and we absolutely and under no circumstances whatsoever, should people expect compensation through this,” Rathi said.
Billions have been wiped out from the crypto market lately thanks to the collapse of sizable companies including FTX and Celsius Network. The FTX bankruptcy proceedings revealed that 80,000 U.K. crypto traders lost their funds due to that company's demise.
Also appearing at the hearing was newly appointed FCA chair, Ashley Adler, who said the crypto industry needed to “detoxify” and deserved “tough” regulatory oversight.
So far only 14% of crypto companies that have tried to register with the FCA have managed to win approval. Rathi called most of the applications “exceptionally” poor and said the agency needs to do a better job communicating its expectations – something it began to do in January.
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