While central banks – like the Bank of England – issue and oversee the money we use every day, cryptos are developed and run by groups, individuals or companies. As a result, information about these businesses can be scarce and it’s highly unlikely that clients investing in crypto will be protected by the Financial Services Compensation Scheme if things go wrong.

Risk assessment for crypto in the UK, it is important for firms to take the time to develop robust risk assessments that help them identify and mitigate anti-money laundering (AML) and countering terrorist financing risks. This is particularly true for regulated crypto businesses, including those offering KYC, CDD and transaction monitoring services. The UK’s AML regime is one of the most stringent in the world, with the FCA playing a key role through its AML registration process.

Risk Assessment for Crypto Investing in the UK

In addition, the FCA has a long-standing regime that requires firms to make appropriate disclosures when marketing any product to consumers. This was extended to include cryptocurrencies and certain stablecoins in 2023, with firms obligated to provide standardized risk warnings.

However, despite the UK’s strong regulatory framework, it is worth noting that political shifts could potentially reshape future regulations. As such, firms should remain aware of the UK’s evolving landscape and be ready for potential updates to AML requirements, financial promotions and other regulations designed to improve market integrity.