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The Financial Conduct Authority (FCA) is increasing its investigations into cryptocurrency companies. The FCA is a financial regulatory body in the United Kingdom and operates independently of the UK government. According to new figures, the number of investigations into digital currencies has doubled.
With more and more companies stepping into the digital currency space, there are inevitably more issues surrounding their conduct. The FCA stated that they have conducted inquiries into 50 companies that are suspect of operating financial services without permission. Adding to this concern, this year has seen 7 whistle-blowing reports, extremely concerning when you consider there have been none over the previous three years. These reports come from concerned employees working in the digital currency space.
Bitcoin’s volatile past and present have brought it under the spotlight of the FCA. With the ever-increasing excitement over Bitcoin as it continued to reach new heights in 2017, caused many people to invest. Many of those investors have now lost considerable amounts of money. It is expected that because of this, the FCA has been flooded with complaints about this, and will have to investigate any allegations of fraud.
The FCA wants to ensure that the market can operate fairly so that investors can make informed decisions about where to invest their money, and that they can have reasonable expectations about the outcomes. This is a particularly difficult line to walk with an unregulated new digitally currency, but they need to strike the balance somehow.
While Bitcoin is volatile, and people need to be aware that they are taking a substantial risk by investing, it’s also worth remembering the human element of all of this. Digital currencies appear to be a a useful technology that will represent our financial currency, but setting these crypto businesses up, isn’t without human error and greed. It is fair to assume that the growth in concerned employees whistleblowing is tied to dodgy business practices by new companies unsure how to operate in the space. Whenever there is money to be gained and few rules to follow, there will always be cowboys looking to make some money. Cryptocurrency is currently suffering from this phenomenon and will be until financial authorities find a way to deter this type of behavior.
Deterring this behavior and implementing fair business practices is a difficult endeavor for a new market. Crypto was born out of dissatisfaction for the current system, so applying traditional financial market rules to it may ruin it. It may force cryptocurrency into a box it was never intended to fit in, only adding more frustration.