In a landmark decision
issued on Tuesday by the U.K.’s Financial Conduct Authority, companies
in the country will no longer be able to offer cryptocurrency
derivatives products such as futures, options and exchange-traded notes
(ETNs) to retail customers.

The decision comes almost exactly one year after the regulator first proposed banning these products. In a statement released by the FCA, the regulators claim that cryptocurrency derivatives are “ill-suited for retail consumers due to the harm they pose.”

Several
reasons are provided for more detail, including concerns that they 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 come into effect
on Jan. 6, 2021. The regulator warned that “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.”

Regulators say that this measure would “save around £53m” for retail consumers, presumably in trading losses.

“This
ban reflects how seriously we view the potential harm to retail
consumers in these products. Consumer protection is paramount here.”

One of the companies hit hardest by the ban will be CoinShares, which last year mounted a campaign to convince the regulator to abandon its plans. CoinShares offers ETNs and other types of crypto products aimed at traditional markets.

source link : https://cointelegraph.com/news/uk-s-fca-bans-retail-crypto-derivatives-after-year-long-consideration