Ongoing rise in cryptocurrency scams increases calls for regulation
According to recent research by financial claims management company Refundee, scams involving cryptocurrency are on the rise.
Charlotte Tregunna spoke to City A.M. about the rise in crypto fraud, commenting that this was “inevitable”, since scams are prevalent in traditional finance.
The types of scams invented by scammers are also increasingly imaginative, with new and sophisticated investors both at risk of falling prey to “scammers’ ability to adapt to new crypto products and environments with ease”.
“The scale and impact [of crypto scams] has been exacerbated by the speed at which the crypto market has grown; the lack of comprehensive and joined up regulatory framework both domestically and internationally (still in its infancy in most jurisdictions); and the inherent difficulties in pursuing scammers who are often not situated in the same country as their victims,” Charlotte said.
As Charlotte explained, one partial solution would be increased regulation. In that regard, HM Revenue & Customs recently closed a consultation on the future financial services regulatory regime for cryptoassets.
However, it remains to be seen how regulation would work or whether it would be fit for purpose. In the meantime, “crypto scams will continue unabated” until regulators take proper steps, so investors need to be careful and if an opportunity “sounds too good to be true, it probably is”.