The FCA ban on the sale of cryptocurrency derivatives to retail investors comes into force in the UK today. Participants in the cryptocurrency industry fear future negative effects.
In October, the UK Financial Conduct Authority (FCA) published regulations prohibiting the sale of cryptocurrency derivatives to retail investors. The ban includes exchange traded bonds (ETNs) for digital currencies, contracts for difference (CFDs), options and futures. The regulator believes that the new regulations will protect retail investors from losses and save them about £ 53 million.
Many cryptocurrency companies fear that regulation tightening will force consumers to use unregulated exchanges to stay out of the reach of the FCA. This opinion is shared by Dermot O’Riordan, partner of the European venture capital firm Eden Block. According to O’Riordan, the FCA ban indicates the regulator’s inability to control the cryptocurrency industry.
“It’s a shame to ban the sale of cryptocurrency derivatives to retail investors. Services offering such products are already regulated or ready to be regulated. FCA’s actions will lead retail users to platforms that cannot protect them, unlike regulated services. It is unclear how such a scenario would be beneficial for retail customers, ”said O’Riordan.
The impact of the ban will be felt not only by exchanges and cryptoasset management groups, but also by traditional investment firms working with digital currencies. For example, FTSE 100 investment company Hargreaves Lansdown imposed restrictions on cryptocurrency derivatives trading before the deadline. Danny Cox, head of external affairs at Hargreaves Lansdown, said the FCA has made clear its position on these products. To protect the interests of investors, the company’s management was forced to prohibit them from purchasing such products through its platform, without waiting for the appointed date. Trading firm IG also shut down CFD trading due to the regulator’s ban.
However, CoinShares’ head of product development, Townsend Lansing, said the FCA ban would not have a major impact on the company’s operations given its diverse customer base. Many analysts are also of the opinion that the new regulations will hardly affect the market, since its size is not too large.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
