Your favorite crypto news blog

U.K.’s Financial Conduct Authority Strikes Ban On The Sale Of Crypto Derivatives

Crypto 2020/10/06 19:20 by Olivia Brooke
U.K.’s Financial Conduct Authority Strikes Ban On The Sale Of Crypto Derivatives

The cryptocurrency communities in several countries might be excited to adhere to new policies that are preceding numerous bans that have recently been overruled, but the U.K.’s cryptocurrency community may be taking a step back, following a stern ban that has just been launched against the sale of crypto derivates to retail consumers.

The Financial Conduct Authority has made it known in a new brief published on its official website that its final rules on the ban of the sale of derivatives and exchange-traded notes (ETNs) that references certain kinds of cryptocurrency assets to retail consumers have been made clear and come January 6th, 2021, the ban would’ve taken full effect. 

Bitcoin, Ethereum, XRP, and Many Other Cryptoassets Are Subject to the Ban

Unregulated digital currencies like Bitcoin, Ethereum, and Ripple’s XRP, despite being some of the leading cryptocurrencies in the derivatives market and in the cryptocurrency market at large, are a few of the many cryptocurrencies that fall into the ban.

The FCA has classified these currencies as “unspecified investments.” In contrast, investments specified in the country’s legislation are considered specified investments and may only be carried out with authorization from the FCA. Therefore, going forward, the sale, marketing, and distribution of these assets to retail consumers, of any derivatives, including options, futures and Contract for difference (CDFs) that cites “unregulated transferable crypto assets,” by firms situated in or acting from the UK, will warrant strict penalties from the FCA.

FCA hopes to cut the increased loss on the retailer’s end

According to the FCA, the ban is positioned as a strategic move by the organization to address and minimize the significant financial losses that retail consumers are left with, upon investing in the aforementioned assets. The FCA labels the crypto assets “ill-suited,” for the retail consumers for lack of inherent value, extreme volatility, and prevalence of market abuse and cybercrime in the market. From the retailer’s end, the FCA is convinced that there is no legitimate investment need for retail consumers who invest in the product and also little to no understanding of the crypto assets by retail consumers, thereby resulting in a sudden unexpected loss for involved retailers.

From the FCA’s estimation, the ban will help to save almost £35 million once implemented. Chiming in, Sheldon Mills, the interim Executive Director of Strategy and Competition at the FCA disclosed that the ban mirrors down “how seriously the FCA views the potential harm to retail customers in these products.” Consumer protection is paramount here,” he added.

The ban comes a year after the FCA revealed that retail consumers are not ready to trade derivatives, for the same reasons mentioned above. However, the traditional financial exchange which was at the time in opposition to the ban, appealed that the FCA “charts the right regulatory course to allow the market to flourish and benefit its consumers even as we understand that it’s a balancing act.” Clearly, the FCA has ruled out on that move with its recent publication and any favorable regulatory guidelines implemented will come next year, after the ban is incepted. There’s also a possibility that regulatory guidelines may take even longer to be considered.

0 Like(s)

You should also read...

Crypto 21/11/19 23:00 by Rick D.
Crypto Retail Adoption Grows, Hot Spots Found in all Corners of the World
Despite the fact that many crypto naysayers say that digital currencies are useless for payments, the number of retailers accepting payment via cryptocurrency is growing. Hot spots are emerging all ov...
Read More
Crypto 08/03/20 08:36 by Brenda Ngari
After Germany, India, South Korea, And France, Are More Countries Likely To Warm Up To Crypto Real Soon?
The past couple of days have been spectacular in terms of bolstering crypto adoption. Financial regulators and lawmakers in India, South Korea, Germany, and France have softened their stance towards ...
Read More
Bitcoin 10/06/20 00:33 by Brenda Ngari
Bullish Boost: A Quarter Of Large Institutional Investors Hold Bitcoin In Their Portfolio, New Survey Reveals
In early May, bitcoin underwent halving, the third in the network’s history. This means that the mining rewards were reduced from 12.5 BTC to 6.25 BTC. As a result, there are now fewer bitcoins bei...
Read More
Bitcoin 13/10/20 05:00 by Nick Chong
Bank of England Governor Still Isn’t a Fan of Bitcoin
While central banks are embracing digital currencies, they still aren’t a fan of Bitcoin and other cryptocurrencies. The Bank of England’s recently-instated governor made that view clear j...
Read More
Bitcoin 23/12/20 19:17 by Thomas Delahunty
Why Bitcoin Buyers Should Beware of Unregulated Exchanges
There are many reasons to be optimistic about the future of cryptocurrency. This year, as bitcoin soared past its all-time high, we saw PayPal introduce support for digital assets; a Nasdaq-listed com...
Read More