Citizens of the United Kingdom involved in cryptocurrency were hit with two doses of negative news today.
The Financial Conduct Authority (FCA) has issued a statement warning cryptocurrency investors that “they should be prepared to lose all their money.”
The news hit right after HSBC, a British multinational investment bank, announced that local cryptocurrency traders and investors would no longer be allowed to transfer funds between their accounts and cryptocurrency exchanges.
Although there’s no indication that the two announcements were related in any way, they both portray crypto in a negative light.
The FCA Announcement
The FCA opened its statement on the inherent risks in investing in cryptocurrencies very bluntly by stating:
“The FCA is aware that some firms are offering investments in cryptoassets, or lending or investments linked to cryptoassets, that promise high returns. Investing in cryptoassets, or investments and lending linked to them generally involves taking very high risks with investors’ money. If consumers invest in these types of product, they should be prepared to lose all their money”.
The watchdog identified risks present in cryptocurrency projects and potential scams in the industry. Although prevalent, they can usually be avoided with a certain level of knowledge and experience in the blockchain space.
The FCA further highlighted the latest regulation on cryptocurrency-based firms, stating that:
“all UK cryptoasset firms must be registered with the FCA under regulations to tackle money laundering. Operating without a registration is a criminal offence.”
The restrictions will likely give the governing financial body additional insight into UK crypto users and traders.
HSBC Blocks Cryptocurrency Exchange Transfers
There is usually an associated bank account for every investor in the cryptocurrency space to provide a fiat exchange.
HSBC, one of the largest banks in the UK, has told its customers that it will no longer accept transfers relating to crypto, potentially freezing out many UK customers from the market.
HSBC stated that it is imposing these new regulations due to anti-money laundering (AML) regulations. So is this announcement related to the FCA’s?
It’s unclear, but the move is seen by some in the crypto community as somewhat ironic. HSBC recently settled a record fine of almost $2 billion for laundering money in a gigantic Ponzi scheme operating out of Hong Kong.
For now, it seems that UK crypto traders will have to switch banking services to access their funds. The new regulations may also make it harder for investors to interact with UK-based firms.