On Wednesday the UK Financial Conduct Authority’s decision was made by The ban on cryptocurrency futures and exchange-traded bonds has finally come into effect.
The FCA first announced the ban in October 2020 after looking into the matter for a year. At the time, the FCA argued that Crypto derivatives were not suitable for private investors They threatened to suffer significant losses.
Comment on the decision when the ban went into effect on Wednesday, Ian Taylor, Chairman of the Self-Regulatory Trading Group, CryptoUKsaid Cointelegraph:
“The regulator is clearly focused on consumer protection for good reason. Derivatives allow leverage that allows investors to increase their profits, but also their losses. The FCA has raised concerns that retail investors are exposed to significant losses and volatilities that they may not be able to fully appreciate. “
However, Taylor criticized the FCA rating of crypto derivatives for private investors as not demanding. The President of CryptoUK also noted that lThe FCA could have opted for stricter leverage limits similar to the restrictions on contracts for differences, rather than imposing a blanket ban.
With the ban in place, Crypto derivatives can no longer be included in individual savings accounts, ISAs and self-invested personal annuities or SIPP. However, there are concerns that The move can lead investors to unregulated offers in other countries They pose an even greater risk for retail investors than products previously offered in the UK.
At the time of the first announcement of the ban Some critics of the decision pointed to a possible negative impact on the introduction of cryptocurrencies in the UK. Simon Peters, a cryptanalyst for the multi-asset investment platform eToro, rejected these fears and told Cointelegraph:
“In my experience with our largest UK clients at eToro, most of them want to keep the real crypto asset rather than trading a derivative like CFD because they see the usefulness of the underlying crypto asset.”
Actually, Crypto adoption appears to be increasing in the UK. In June 2020, the FCA estimated cryptocurrency ownership among the adult population at 2.6 million. That takeover is also shifting to the institutional side as UK-based investment manager Ruffer recently switched 2.5% of its asset base to bitcoin.