Regulators must step up protections for consumers who invest in crypto tokens and keep in mind that overreach could backfire. The chair of the United Kingdom’s Financial Conduct Authority (FCA) has warned. In a new speech written for the Cambridge International Symposium on Economic Crime, chair of the FCA and Payments Systems Regulator, Charles Randell, said that there is currently a real problem with consumers who delve into the crypto market without due awareness of the risks.
FCA chair points out growing crypto promotion.
FCA chairman singled out the role of influencers and paid-for advertising, in particular, noting that Kim Kardashian’s recent Instagram promotion of EthereumMax (EMAX), a brand-new token issued by “unknown developers,” “may have been the financial promotion with the single biggest audience reach in history.” While the FCA chair reserved judgment on whether or not EthereumMax is itself fraudulent, the vast reach of such a campaign and its potential to mislead under-informed consumers should give regulators pause, he implied.
Randell claimed that many consumers remain blind to the financial risks.
Add to this dynamics such as retail investor hype, FOMO, and the proliferation of pump-and-dump crypto-related scams. Randell further claimed that many consumers remain blind to the financial risks they are courting by trusting influencer endorsements and savvy online token campaigns. To illustrate his point, Randell underlined that around 2.3 million U.K. citizens currently hold crypto, 14% of whom have “worryingly” used credit to purchase it. Moreover, 12% of crypto holders — roughly 250,000 Britons — mistakenly believe they will be protected by the FCA or U.K.’s Financial Services Compensation Scheme should things go wrong, according to the FCA’s research.