The number of cryptocurrency firms being investigated by the UK’s financial regulator has surged by 74 percent this year, the Financial Times reports today.

The FCA is looking into 87 crypto companies, compared with 50 this time last year, according to data obtained by UK law firm Pincent Mason and reported in the FT. The investigations are reportedly at various stages.

The rise signals a crypto crackdown by the Financial Conduct Authority. Earlier this year, it published research estimating that consumers lost at least $33m in crypto and foreign-exchange scams, which have more than tripled in the past year to around 1,800.

‘This is better than a knee jerk reaction of ‘we don’t want to regulate crypto asset businesses,’” Jacqui Hatfield, Head of UK Financial Regulation at law firm Orrick, told Decrypt.

Notably, she said that the activity was not only focused on ICOs that were suspected of offering tokens as securities, but also those who have passed current regulations.

“I have, at the instigation of the FCA, had to analyze the businesses of some of those clients and educate the FCA to some extent re: what they are doing. I felt they wished they had not authorized those clients in part because they don’t understand it properly,” she said.

Buying and selling cryptocurrencies is currently unregulated in the UK. The FCA has, to date, adopted a “tech neutral” approach and has treated cryptocurrency businesses much like other financial services.

But there are other signs that this approach is coming to an end.

In July, the watchdog proposed a blanket ban on selling crypto-derivatives to retail investors. It ended a consultation on the proposal on October 3, and a decision is expected in early 2020.

“It would take an earthquake for the FCA not to press ahead,” according to the author of a report on the coming decision by The Economist, published last week.

Crypto-derivative products include options, futures and swaps. They are popular vehicles for crypto investors, and 23 billion have been traded this year, research firm Chainalysis estimated.

But, according to its reports, the FCA is fearful of the impact on retail investors, judging them “impossible” to value and “akin to gambling.”

The watchdog also estimates that UK investors made total losses of $492 million (and profits of only $31 million) on crypto-derivatives in the 18 months between mid-2017 to the end of 2018.

And the fact that platforms typically allow derivative traders to borrow between two and 100 times what they put in, and the high trading costs involved are further red flags for the regulator.

A blanket ban by the FCA would also be in line with similar actions being considered by Japan. Europe imposed stricter regulations last year.

However, industry professionals believe that a hard-line approach is misjudged.

Today, the World Federation of Exchanges (WFE), who's members include CME Group, Nasdaq and Intercontinental Exchange urged the U.K.’s finance watchdog not to impose a ban on crypto-derivatives for retail investors.

Hatfield contends that instead of knee jerk reactions, the FCA should take time to fully understand the business, issues and risks of crypto firms.

“I think that crypto derivatives should be treated in the same way as other derivative marketing and sales to retail customers—they should not be more harshly treated,” she Hatfield, adding that there is already regulation in place that governs this type of trading, and “this is by far the better approach.”

However, there appears to be little sign of this.

The FCA now even has its eye on the open source code used by the vast majority of decentralized projects, and is mooting whether it should be subject to anti-money laundering regulations.

Let’s hope it understands what it’s looking at.