Within a recent big decision issued today on Tuesday by the U.K.’s FCA [Financial Conduct Authority], the businesses operating within the country will not be able to offer cryptocurrency derivatives products like futures, options, and ETNs [exchange-traded notes] to there retail users.
This awaited decision arrives almost exactly a year after the regulators first proposed banning these products. Within an official statement published 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, along with the concerns that they need “no reliable basis for valuation,” are subject to abuse and financial crimes, and are extremely volatile.
Additional motivations cited embody the “inadequate understanding of crypto assets by the retail users” & a claim that retail investors lack a “legitimate investment need” for these products.
The ban will inherit effect on 6th Jan. 2021. The regulator warned that “as the sale of derivatives and ETNs that reference certain sorts of crypto assets to retail users is now banned, any firm offering these services to retail consumers is probably going to be identified as a scam.”
Regulators added that this measure would “save around £53m” for retail users, presumably in trading losses.
“This ban reflects how seriously we view the potential harm to retail users in these products. Consumer protection is paramount here.”
One of the businesses hit hardest by the ban will considerably be CoinShares, that last year mounted a campaign to convince the regulator to abandon its plans. CoinShares offers ETNs and other sorts of crypto products aimed towards the traditional markets.