In its warning to regulated firms, the FCA stated that its needs to be clear with customers that cryptoassets sit outside of the FCA’s regulatory remit.

The warning said there was a “risk of consumer confusion” where regulated firms provide services including cryptoassets.

The regulator said: “We expect firms to ensure that consumers understand the extent of business that is regulated and to clearly distinguish those elements which are unregulated business.

“At all times, firms remain responsible for identifying and managing potential risks related to cryptoassets.”

It said that firms should use a similar approach to that of their regulated activities when they assess the risks posed by cryptoassets.

The FCA said that regulated firms should be reviewing if cryptoasset businesses they deal with are listed on the FCA’s Unregistered Cryptoasset Business page.

The regulator said firms should also assess the risks posed by any clients whose wealth derives from the sale of cryptoassets or other cryptoasset-related activities.

It said: “One way cryptoassets differ from other sources of wealth is that the evidence trail behind transactions may be weaker.

“This does not justify applying a different evidential test on the source of wealth and we expect firms to exercise particular care in these cases.”

It added that it expects all authorised firms to have appropriate systems and controls in place to counter the risk of being used for financial crime.

The FCA is currently working with the Government and other parties on the UK’s approach to cryptoasset regulation through the Cryptoassets Taskforce.