The Financial Conduct Authority issued a stern warning to UK consumers about the risks of using unlicensed cryptocurrency trading platforms, adding dozens of new firms to its warning list. The regulator emphasized that users of unauthorized platforms have no recourse to the Financial Ombudsman Service or compensation schemes if things go wrong.
The warning comes amid continued reports of consumers losing money on platforms operating without proper authorization. The FCA cited cases involving frozen withdrawals, manipulated prices, and outright fraud. In many cases, the platforms in question are based overseas and beyond the reach of UK enforcement.
Cryptocurrency firms wishing to operate in the UK must register with the FCA and comply with anti-money laundering requirements. Of the hundreds of firms that have applied for registration, the FCA has approved fewer than 50, with many withdrawing applications rather than meeting regulatory standards.
Industry participants have criticized the FCA's registration process as slow and opaque, arguing that legitimate businesses are being driven offshore while the regulator focuses on enforcement against obvious bad actors. The FCA has defended its approach, noting that the high rejection rate reflects the poor quality of many applications.
For consumers, the message is clear: using authorized platforms provides important protections, even if the choice may be more limited. The FCA maintains a register of authorized cryptocurrency firms on its website, which consumers should check before depositing funds with any platform.