Posted 6 months ago | by @devadmin
The United Kingdom’s (UK) Financial Conduct Authority (FCA), has banned companies in the country from offering cryptocurrency derivatives products such as futures, options, and exchange-traded notes (ETNs.)
The historic decision was dragged on for a year since the body first proposed banning derivative products according to Coin Telegraph. In a statement released by the FCA, the regulator claimed that cryptocurrency derivatives are “ill-suited for retail consumers due to the harm they pose.”
Numerous reasons for the ban were provided by the regulator, including concerns that crypto derivative products 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 officially come into effect early next year on Jan. 6th, 2021. The regulator warned, “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.”
The regulator further added that banning the sale of crypto derivatives would “save around £53m” ($62.5 million) for retail consumers, presumably because of avoiding trading losses.
“This ban reflects how seriously we view the potential harm to retail consumers in these products. Consumer protection is paramount here.”
It’s important to note that this ban is not being extended to professional traders or institutional firms like hedge funds, which have typically been allowed access to riskier financial products than the general population. It’s only being implemented to prevent retail investors from joining the party.
Many may have missed this news since John McAfee was arrested the same day in Spain taking away the limelight. McAfee’s situation was complicated as Janice, McAfee’s wife tweeted out a photo of herself and John. It turns out interns were running the account and had fed various people disinformation that John was “safe” on accident.
Across the pond in the U.S. Bitmex was recently accused of operating an illegal futures and derivatives platform by the Department of Justice. They further accused Bitmex for operating without being US-registered and allegedly failing to follow anti-money-laundering rules.
So it seems that jointly the U.S. and UK are going after crypto trading firms putting an end to the wild, wild west of derivative trading. The U.S. also recently released a report discussing Privacy Coins stating using them is akin to potential “criminal conduct.” The U.S. also said that any foreign crypto project using U.S. servers is open to broad extraterritorial jurisdiction, as Bitboy Crypto previously reported.
We are shifting to a world with crypto but everything is being regulated, this isn’t what we imagined. What’s more? More indictments are likely coming as recent findings from the University of Cambridge found that most firms involved in crypto investments are still operating without a license.
BitMex has said that around 30% of customer funds have been withdrawn since the U.S. issued charges, but insists it is open for “business as usual”.
Bitcoin is currently trading at: [FIAT: $11,036] UP 1.3% at the time of this report according to Coin Gecko.