The Financial Conduct Authority in the United Kingdom has warned consumers against trading on Sam Bankman-Fried’s cryptocurrency exchange FTX, which it claims isn’t authorized by the regulator to provide financial services or products in the country. The FCA had previously issued a similar warning about another well-known crypto exchange, Binance, and its activities in the UK. However, this wasn’t an isolated incident as dozens of regulators from all around the world put out similar statements not long after.

UK warning FTX

FTX Overview

FTX is a cryptocurrency exchange founded in 2019 by Sam Bankman-Fried, a former quantitative trader at Jane Street Capital. It offers a wide range of features including margin trading, derivatives, volatility products, and leveraged tokens. The exchange also has its own token, FTT, which can be used to pay for trading fees or discounted trading fees. FTX’s mission is to provide a more sophisticated platform for trading cryptocurrencies. It is headquartered in the Bahamas.

graphic saying cryptocurrency exchange

Challenges Faced by Global Financial Regulators

The global crypto markets have posed a challenge for financial regulators around the world, who are tasked with protecting consumers and imposing standards. Many of the largest crypto groups are based in offshore jurisdictions, making it difficult for authorities to impose their regulations. In response, some companies have set up American affiliates to appease US authorities, but they continue to offer services in other countries from their international base. This has created a loophole that allows these companies to operate outside of the law in many jurisdictions. As the crypto markets continue to grow and evolve, it is unclear how financial regulators will be able to keep up.

FTX’s Response

This month, FTX’s European division announced that Cyprus’s financial regulator had granted it an investment firm licence. This is a significant development for the crypto exchange, which is looking to expand its operations across the continent. FTX’s representatives told us that securing this licence in the European Union is an important step in achieving its goal of becoming one of the most regulated exchanges in the world. This move will no doubt give FTX a major boost as it looks to gain a larger share of the European crypto market.

The Impact on Consumers

UK clients dealing with FTX would not have access to UK consumer protections such as the Financial Ombudsman or Financial Services Compensation Scheme. This means that if things go wrong, they may not be able to get their money back. As FTX is not authorised or regulated by the Financial Conduct Authority (FCA), UK clients would not have the same level of protection as they would with an FCA-authorised firm. For these reasons, it is recommended that UK consumers should avoid dealing with FTX.

men looking at crypto charts

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By Sardar Arslan

Sardar Arslan is a highly respected figure in the blockchain and cryptocurrency space. A well-known author, investor, and public speaker, he is focused on emerging technologies such as blockchain and cryptocurrencies. He has been quoted in numerous publications on these topics, and his insights are sought by business leaders and entrepreneurs around the world.