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The Financial Conduct Authority (FCA) in the UK has written an official warning to bank CEOs about the potential risks of processing cryptocurrencies.

 

Britain has more than 58,000 financial service companies and financial markets and has previously warned of the risks of investing in cryptocurrencies.

 

The FCA speaks to financial institutions, especially banks during this warning. The statement urges clients and customers to be cautious if they associate with “cryptoassets.”

 

For the investors who are provided services in cryptocurrencies by banks, there are some steps which may reduce the potential risks of investing. They include “carrying out due diligence on key individuals in the client business” and “ensuring that existing financial crime frameworks adequately reflect the crypto-related activities which the firm is involved in.”

 

Even though not all financial groups and individuals dealing with cryptocurrencies would have the same risks, the FCA pointed out a few “high-risk” activities. 

 

Clients and customers who use state-sponsored cryptocurrencies are at risk of having their accounts closed because such currencies are “designed to evade international financial sanctions.”

 

Additionally, if  token sales or Initial Coin Offerings (ICOs) were sending a large amount of money by retail customers, these customers may have “high-risk” of investment fraud.

 

There is still some fraud that can occur when people deal with cryptocurrencies, especially in that they can provide “potential anonymity and the ability to move money between countries.” The FCA keeps emphasizing that financial companies need to have “particular care” when they use cryptocurrencies.

 

Bibliography

Kim, Christine. UK’s Financial Watchdog Issues Letter to Banks on Crypto Risks. Retrieved June 11, 2018, from Coindesk: https://www.coindesk.com/uks-financial-watchdog-issues-letter-to-banks-on-risks-of-crypto/

 

Photograph Retrieved from URL: https://www.pastemagazine.com/articles/2018/01/bank-of-americas-new-poor-tax-is-why-the-world-nee.html

 

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