The UK’s Financial Conduct Authority (FCA) has banned the sale of crypto derivatives to retail investors. The ban will come into force on January 6, 2021.
The UK Financial Conduct Authority ( FCA) has banned the sale of crypto derivatives to retail investors. Such a proposal had already been made more than a year ago
The financial products cannot be reliably assessed for private customers and are therefore unsuitable. There is no reliable basis for valuation, an insufficient understanding of crypto assets by private investors and no major investment need for them. The risks for small investors are ultimately too high. Cyber theft is also a danger.
Commenting on the ban, Sheldon Mills, Interim Executive Director of Strategy and Competition at the FCA, said:
This ban reflects how seriously we take the potential harm to retail investors in these products. Consumer protection is paramount here
In order to avoid greater damage, the FCA has now issued rules. The sale and marketing of crypto derivatives for private investors will be prohibited in future.
Significant price volatility in connection with the inherent difficulties in reliably valuing crypto assets carries a high risk for private investors of suffering losses through trading in crypto derivatives. We have evidence that this is happening on a significant scale. The ban offers an adequate level of protection,
said Sheldon Mills meanwhile. The sale of derivatives and ETNs is now prohibited in the future. As a result, every company that offers these services to retail investors is now liable to prosecution. The actions of the FCA do not only affect the exchange of crypto derivatives. Crypto brokers, investment platforms, and financial advisors are also included. The ban will come into force on January 6, 2021.