Nikhil Rathi, CEO of the regulator, said he wanted to “draw clear lines” around access to regulatory bodies for cryptocurrency investors.

In a speech yesterday he said: “We need to draw clear lines. We need clarity around ruling out future Financial Services Compensation Scheme coverage for investment losses from crypto, even when advised. 

“As we have consistently warned, if you invest in crypto you need to be prepared to lose all your money.”

In April the Treasury said it will regulate some ‘stablecoins’, a basic form of crypto currency linked to a currency, and look to encourage crypto asset innovation in the UK. 

Mr Rathi said: “In crypto, our remit is currently limited to ensuring anti-money laundering rules apply to crypto firms. So we welcome the government’s recent announcement of a flexible approach to regulation so we can proportionately deal with any risks that emerge and to receiving new powers over the promotion and marketing of high-risk assets, like crypto.”  

The regulator is currently finalising its approach to crypto asset regulation, ahead of it being handed new powers over the promotion of risky assets, including crypto currency.

The FCA said it had received a lot of interest in its CryptoSprint event taking place in May. The event will discuss industry views on the future regulation around crypto assets.