On Wednesday, Nikhil Rathi, Managing Director of the UK’s Financial Conduct Authority (FCA), issued the following statement to the Treasury Committee when asked about the risks of the loosely regulated cryptocurrency sector in the country:
When we talk about the compensation scheme, we have to draw some pretty clear lines. I would suggest that everything related to cryptocurrencies should not be entitled to compensation, and consumers should be clear about this when investing.
Rathi refers to the FCA Financial Services Compensation Scheme, or FSCS, which pays compensation to consumers when certain licensed financial institutions are unable to address claims against them, such as in the case of bankruptcies, criminal schemes, or default. of insurance contracts. In theory, the proposed rules would prevent the UK government from paying compensation to crypto investors who have been scammed by allegedly fraudulent exchanges or by rug pulls on DeFi, as these types of investments are unregulated or operate in loopholes. . More than GBP 717 million was paid to consumers this year by the FSCS in compensation for a financial loss.
Nikhil Rathi speaking at the Treasury Commission hearing | Source: parliamentlive.tv
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