UK’s ban on the sale of crypto derivatives goes into effect today By BTC Peers

UK’s ban on the sale of crypto derivatives goes into effect today

UK’s ban on the sale of crypto derivatives goes into effect today

Following the announcement by the Financial Conduct Authority (FCA) in October 2020 to restrict the sales of crypto derivatives to retail consumers, the ban has gone into effect from today, January 6, 2021. What this means is that CFDs, options, ETNs, and futures that reference cryptocurrencies can no longer be offered to retail investors in the U.K.

According to its earlier press release, the FCA described crypto derivatives as “ill-suited for retail consumers due to the harm they pose. The agency gave several reasons why these classes of offers should not be accessible to retail investors. For one, they believe that cryptocurrencies have “no reliable basis for valuation.” This is in addition to the extreme volatility of the assets and a supposed inadequate understanding of crypto assets by retail consumers.

Restrictions

To drive home its ban, the regulator claimed that the restriction will save retail investors up to £53m.

But despite the perceived valid points the regulators may have given, industry commentators believe that no form of restriction or regulation could stop retail investors. Rather, such bottlenecks would only drive consumers onto unregulated exchanges or offshore.

Speaking on the matter, Dermot O’Riordan of Eden Block criticized the FCA’s ban on crypto derivatives. He said:

It’s a shame because the only players that actually are regulated (or want to be) to offer crypto derivatives products to retail (Coinshares, Crypto Facilities, etc.) are generally good actors. This move will drive retail users to unregulated platforms like Deribit and BitMEX who will offer even less protection than the regulated players. So, it’s not clear how the average retail user wins in this scenario.

In response to the ban, some blockchain offers are already boycotting U.K. residents.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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