British Regulator Looks To Possibly Ban Crypto CFDs For Retail Investors As Security Tightens


The Financial Conduct Authority (FCA), known as one of the most important financial watchdogs of the United Kingdom, is currently preparing a ban on the sale of crypto derivative assets to retail investors in the country.

An official document released by the institution has been revealed recently. The document is entitled “Restricting contract for difference products sold to retail clients” and, as you may have guessed already because of its name, it is all about not allowing retail clients to purchase contract for difference products (CFDs) anymore.

If this is to actually pass, investment options such as Bitcoin (BTC) derivatives could be endangered in the United Kingdom.

According to the FCA, a consultation paper should be published in the next few days. The paper will explain the potential ban on the sale of these assets to regular retail customers.

In fact, the decision is far from sudden, as it was talked about for over a year. The executive director of strategy and competition at the FCA, Christopher Woolard, hinted at the ban in 2018.

The FCA has met with the U. K. Crypto asset Task force in July 2018 when the task force published its report on the sector. A public commitment to ban crypto-based CFD for retail investors has been made back then and updated in October last year.

Now, the FCA affirmed that the new rules will replace the current ones for crypto-based contracts for difference as soon as they are approved. The new regulation, according to them, will start to be enforced “shortly”, while no time frame was explicit, we can hope shortly to be still in 2019.

The market will certainly be impacted if the idea of banning this kind of investment moves forward. The main reasoning behind the decision is that CFDs are considered to be complex and leveraged, so most retail investors are risking too much by investing in them.

In order to protect these investors, the regulator will ban them from the market, which is considered the correct attitude by their members. This, the FCA affirmed, will make British people save around $338 to $570 million USD per year. In any case, it is still early to panic if you are a retail investor that invests in CFDs, as nothing is set in stone so far.

Somewhat related to this, the central bank of the U. K. has recently affirmed that Facebook’s Libra coin can have genuine use cases if it was adapted and tailored to the demands of regulatory bodies around the globe.

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