Financial Conduct Authority is investigating 50 UK crypto firms

The Financial Conduct Authority is conducting 50 investigations into cryptocurrency operators, including criminal investigations, as Britain's financial regulator tackles a wave of fraud and unregulated ventures.

The FCA said on Thursday that it had also carried out 300 investigations into unauthorized crypto firms in the six months to September last year.

The announcement comes as financial regulators around the world are taking a closer look at the digital asset industry in a bid to improve consumer protection and curb the potential for money laundering in the still lightly regulated industry.

Consumers reported 4,300 potential crypto scams to the FCA's ScamSmart website in the six months last year, well above the 1,600 reports for the second most common category related to pension transfers.

“The data we have published today shows how widespread fraud can be,” said Sarah Pritchard, executive director of markets at the FCA.

The regulator's monitoring of crypto firms is mainly limited to ensuring they comply with anti-money laundering standards and shutting down unsupervised UK-based firms. However, the FCA said there was significant overlap between unauthorized firms and fraudsters.

The regulator maintains a list of almost 250 firms that "appear to be carrying out cryptoasset activities that are not registered with the FCA for anti-money laundering purposes", although it said this register is likely to provide only a partial picture of unauthorized activity.

British politicians have increased pressure on the FCA in recent months to take more decisive action against crypto as the industry grows rapidly.

“Why do we allow... non-compliant crypto asset companies to trade with impunity, and when can we expect them to be put out of business?” said Lord Browne of Ladyton, a Labor peer and former cabinet minister, in the House of Lords on Wednesday.

The calls for increased oversight come as more and more British retail investors try their hand at crypto investments.

A survey by investment platform AJ Bell found that 30 percent of crypto investors have more than 10 percent of their portfolio in digital assets, while a third say they are unwilling to lose money on their digital asset investments. Investors have made these allocations even after the FCA repeatedly warned that people should only invest money they are willing to lose in crypto.

AJ Bell's research also found that half of crypto investors don't have an ISA, while four in ten don't have a pension. Laith Khalaf, head of investment research at AJ Bell, said the finding “suggests that a high proportion of crypto investors are entering at the low end of the risk spectrum, bypassing the basic building blocks of a financial plan.”