The UK Financial Regulator Is Going To Ban Crypto Derivatives
The UK Financial Conduct Authority (FCA) published a press release on the 3rd of July, informing that it was consulting on a direct ban on 'selling, advertising and distributing among investors' derivatives such as CFDs, options and futures, traded notes (ETN), which are connected with crypto companies in the UK.
FCA considers such financial products to be 'inappropriate' for retail investors, 'who can't estimate the value and risks of derivative instruments or ETN properly'.
The regulator justifies its decision, drawing on various factors, including the fact that cryptocurrencies don't have a 'reliable basis for evaluation'. They also refer to the ' market abuse' and the spread of financial crimes, the 'high' cryptocurrency volatility and the retail investors' misunderstanding.
FCA Estimation and Background on Crypto Derivatives Ban
We estimate the potential gain for retail consumers from banning these products in the range of 75 million pounds to 234.3 million pounds per year,
FCA appointed a consultation plan to ban crypto derivatives in November last year for the first time.
Christopher Woolard, executive director of strategy and competition at FCA, then said that retail investors get 'the products that are complicated, unstable and often using derivatives' based on cryptocurrency with 'underlying market integrity problems.'
FCA representatives claimed they also plan to publish their final 'Cryptocurrency Guide' in summer, 2019.
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