UK Financial Conduct Authority Issues Warning Against OneCoin
The UK’s Financial Conduct Authority issued a warning against OneCoin.
The UK’s Financial Conduct Authority (FCA), an independent public body that is accountable to Treasury and parliament, officially issued a warning against OneCoin operations.
Earlier this month, the Swedish Bitcoin Foundation warned its cryptocurrency community and industry regarding the scam-like structure of OneCoin, a “pyramide” built on illegitimate cryptography and security measures.
The FCA is the second important government-related public body in 2016 to launch an official investigation on OneCoin.
Increasing Awareness of Scam-like Cryptocurrencies
Government agencies and organizations globally are becoming more aware of the structures of scam-like cryptocurrencies, and are requesting law enforcement agencies to conduct in-depth investigations to expose controversial cryptocurrencies that aren’t built and designed to serve as forms of money.
The UK government and its law enforcement understands that OneCoin or any other cryptocurrencies doesn’t require authorization from the local government to operate. However, the City of London Police and the FCA believe if schemes like OneCoin are taking advantage of the rising trend in cryptocurrency to extract money from its users, they are obligated by both local and international financial regulations and policies to interfere with their operations.
No protection from Ponzi schemes
“This firm is not authorised by us and we do not believe it is undertaking any activities that require our authorisation. However, we are concerned about the potential risks this firm poses to UK consumers,” stated the FCA.
The organization further emphasized that users must be more cautious in approaching the cryptocurrency particularly since it is not authorized by the FCA. That means, users of OneCoin are not subjected to compensation schemes supported by the government.
“As OneCoin is not authorised, consumers who deal with it will have no protection from the Financial Ombudsman Service or the Financial Services Compensation Scheme,” added the FCA.
Although government or central authority’s interference with cryptocurrencies and independent financial networks often lead to harmful effects on the financial sector, positive approach from the UK’s FCA in protecting its consumers from Ponzi schemes sets an appropriate precedent and standard for the cryptocurrency industry worldwide.