UK’s FCA bans retail crypto derivatives after year-long consideration


In a landmark decision issued on Tuesday by the U.K.’s Financial Conduct Authority, companies in the country will no longer be able to offer cryptocurrency derivatives products such as futures, options and exchange-traded notes (ETNs) to retail customers.

The decision comes almost exactly one year after the regulator first proposed banning these products. In a statement released by the FCA, the regulators claim that cryptocurrency derivatives are “ill-suited for retail consumers due to the harm they pose.”

Several reasons are provided for more detail, including concerns that they have “no reliable basis for valuation,” are subject to abuse and financial crimes, and are extremely volatile.

Further motivations cited include the “inadequate understanding of cryptoassets by retail consumers” and a claim that retail investors lack a “legitimate investment need” for these products.

The ban will come into effect on Jan. 6, 2021. The regulator warned that “as the sale of derivatives and ETNs that reference certain types of cryptoassets to retail consumers is now banned, any firm offering these services to retail consumers is likely to be a scam.”

Regulators say that this measure would “save around £53m” for retail consumers, presumably in trading losses.

“This ban reflects how seriously we view the potential harm to retail consumers in these products. Consumer protection is paramount here.”

One of the companies hit hardest by the ban will be CoinShares, which last year mounted a campaign to convince the regulator to abandon its plans. CoinShares offers ETNs and other types of crypto products aimed at traditional markets.

Products You May Like

Articles You May Like

‘Definitely not bullish’ — 7% Bitcoin price gains fail to convince traders
Bitcoin liquidations vanish as trader hopes $30K will hit before dip
Shrapnel wows at GDC, Undead Blocks hot take, Second Trip: Web3 Gamer
Billionaire Bill Ackman on US Banking Crisis: ‘I Fear We Are Heading for a Train Wreck’
‘US has left a vacuum that other countries are eager to fill’: Coinbase

Leave a Reply

Your email address will not be published. Required fields are marked *