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FCA bans crypto-derivatives selling to retail consumers

Thursday 8 October 2020 14:03 CET | News

The FCA has published final rules banning the sale of derivatives and exchange traded notes (ETNs) that reference certain types of crypto assets to retail consumers, starting with 6 January 2021.

The FCA considers these products to be ill-suited for retail consumers due to the harm they pose. These products cannot be reliably valued by retail consumers because of the: 

  • inherent nature of the underlying assets, which means they have no reliable basis for valuation;
  • prevalence of market abuse and financial crime in the secondary market (e.g. cyber theft);
  • volatility in crypto asset price movements;
  • inadequate understanding of crypto assets by retail consumers;
  • lack of legitimate investment need for retail consumers to invest in these products.

Unregulated transferable crypto assets are tokens that are not ‘specified investments’ or e-money, and can be traded, which includes well-known tokens such as Bitcoin, Ether, or Ripple. Specified investments are types of investment which are specified in legislation. Firms that carry out particular types of regulated activity in relation to those investments must be authorised by the FCA. 

To address these harms, the FCA has made rules banning the sale, marketing, and distribution to all retail consumers of any derivatives (i.e. contract for difference – CFDs, options, and futures) and ETNs that reference unregulated transferable crypto assets by firms acting in, or from, the UK, according to the official press release.

More: Link


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Keywords: FCA, UK, crypto derivatives, retail, exchange traded notes, ETNs, derivatives, crypto assets, Bitcoin, Ether, Ripple, tokens, contract for difference, CFDs
Categories: Blockchain & Cryptocurrencies | Cryptocurrencies
Countries: United Kingdom
This article is part of category

Blockchain & Cryptocurrencies