UK FCA Bans Crypto Derivatives & ETN Sale to Retail Consumers Starting January 6th, 2021


The financial regulatory body in the United Kingdom, the Financial Conduct Authority (FCA), has declared that cryptocurrency derivatives are “ill-suited” for retail consumers because of the harm they pose.

According to the agency, these products cannot be reliable value to a retail customer because of the inherent nature of the underlying assets, meaning “they have no reliable basis for valuation,” extreme volatility, lack of legitimate investment need, and prevalence of market abuse and financial crime in the secondary market.

All of this means retail customers may suffer sudden and unexpected losses by investing in them, as per FCA’s latest press release on Tuesday.

Bitcoin, Ether, and Ripple also come under unregulated transferable crypto assets that are not ‘specified investments’ or e-money and can be traded, specified the agency.

As such, the sale, marketing, and distribution to all retail consumers of any derivatives, including; futures, options, or CFDs, and ETNs by firms in the UK are banned, w.e.f. January 6, 2021.

“I expect G8 countries to either ban crypto derivatives or limit leverage for retail investors,” said Gabor Gurbacs, digital asset strategist at VanEck.

As such, any firm offering these services to retail consumers is likely to be a scam,” says the agency.

As per the FCA, this move will save retail customers an estimated £53 million ($68.6 million).

“This ban reflects how seriously we view the potential harm to retail consumers in these products. Consumer protection is paramount here,” said Sheldon Mills, interim Executive Director of Strategy & Competition at the FCA.

Also Read: FCA Proposes UK Crypto Exchanges And Wallets Share Money Laundering Data With Regulator

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