FCA warns consumers on crypto firm

FCA warns consumers on crypto firm

The Financial Conduct Authority has issued a warning to consumers after it discovered a firm is intending to launch a cryptoasset offering, despite not holding the full regulatory permissions.

The regulator became aware of promotional material indicating that Coinburp Limited was intending to launch the CoinBurp $BURP Token and Initial DEX Offering on July 26 (today). 

The firm is not yet fully FCA registered under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLRs) but has submitted an application to the FCA for registration.

Coinburp Limited does appear on the FCA’s Temporary Registration Register (TRR) which was established to allow existing cryptoasset businesses to continue trading whilst the regulator assesses their application.

The TRR does not allow any firm to claim to be registered or authorised by the FCA as firms and their personnel have not yet been assessed as fit and proper.

The FCA warned it has very limited powers to protect consumers if they invest in cryptoassets. 

The latest cautionary note comes as last month the FCA issued a warning stating that a "significantly high number" of cryptoasset businesses were not meeting money laundering standards.

In the update today it said: “We have warned previously that investing in cryptoassets (and investments and lending products linked to them) usually involves very high risks.

“Crypto tokens can become very difficult to sell or may significantly reduce in value – and consumers that invest in them should be prepared to lose all their money. 

“It is unlikely that you will have recourse to the Financial Ombudsman Service or Financial Services Compensation Scheme if something goes wrong.”

In January the City watchdog warned investors in cryptoassets promising high returns that they must be "prepared to lose all their money"

Last year the FCA estimated that its ban restricting the sale of crypto-derivatives was set to save retail investors £53m a year