Cryptocurrency  

Cryptoasset scams double in 2021

Cryptoasset scams double in 2021
 

The number cryptoasset scam reports received by the Financial Conduct Authority more than doubled in 2021.

The regulator received 6,372 reports of scams in 2021, compared with 3,143 in 2020, according to a Freedom of Information Request submitted to the city watchdog by Capital Block.

Although investment in cryptoassets is not a regulated activity, certain cryptoasset companies have been subject to money laundering regulations since 2020, which means these firms must be registered with the FCA.

Crypto advertising, however, is not FCA-regulated, although the Treasury has previously announced that it will seek to extend the financial promotions rules to unregulated cryptoassets in the near future.

The regulator is also consulting on rules proposing to treat unregulated cryptoassets as a high risk investment for these purposes. 

Calendar Year

Reports to FCA of Cryptoasset scams

2017

0

2018

991

2019

1,619

2020

3,143

2021

6,372

Source: FCA

An FCA spokesperson said consumers need to have confidence when making investment decisions and should check if the firms they are dealing with are authorised by the regulator before investing. 

They said: “It’s important that consumers check who they are really dealing with before making an investment decision. 

"Find out how to avoid scams on the ScamSmart website and get tips on investing safely on the InvestSmart website.”

Tim Mangnall, chief executive of Capital Block said it is a tough and complicated sector.

“I’ve personally been investing in crypto for years and I still always take a step back and ask myself whether I fully know what I’m getting into, who are the team behind the project and what is their experience in the sector.”

He added it always comes back to due diligence, and whether you are an individual or corporate investor, or an organisation looking to launch a cryptocurrency or NFT, you need experienced, sound advice.

He said: “The space does need full regulation and it needs it fast, otherwise the honest and high-quality advisers, business and platforms will continue to be faced with some of the scepticism the market currently faces.”

sally.hickey@ft.com