When asked by the Treasury Committee about the potential risks posed by the unregulated cryptocurrency market in India, Nikhil Rathi (CEO of the United Kingdom’s Financial Conduct Authority or FCA) made the following statement:
We need to be very clear when discussing the compensation scheme. Anything crypto-related should not be eligible for compensations. Consumers should be aware of this when they invest.
Rathi is referring to the FCA’s Financial Services Compensation Scheme (or FSCS) which pays consumers compensation when certain financial institutions are unable to meet claims against them. This includes bankruptcies and criminal schemes. The proposed rules would prohibit the U.K. government paying restitution for crypto investors who were scammed by allegedly fraudulent cryptocurrency trading platforms or decentralized finance rug pulls. These types of investments are unregulated and operate in legal gray areas. The FSCS paid more than 717 million pounds to consumers in compensation for financial losses this year.
Nikhil Rathi speaks at the Treasury Committee hearingSource : parliamentlive.tv
“There are technologies that underpin cryptocurrency, which I believe we would recognize as having significant benefits, and value such as fighting financial crime,” Rathi said. Rathi said that there are a number of innovations we have concerns about when Rathi was asked about the country’s regulatory framework. We don’t believe that some of these crypto-assets have intrinsic value. They are part of an organized crime network and money laundering. Anyone who invests in them should be prepared to lose everything.
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