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The FCA has banned the sale of cryptocurrency derivatives to retail customers. The ban itself will come into force on January 6, 2021.
The FCA considers these products "ill-suited" to retail customers for multiple reasons. These include the absence of reliable valuations, the prevalence of financial crime amidst these products, extreme price volatility, as well as a lack of understanding of cryptoassets on the part of retail customers, and the absence of legitimate reasons for retail customers to invest in these assets.
To protect against these harms, the FCA has banned the sale, marketing and distribution of these products. The ban is relevant to all firms acting in, or from, the UK.
Sheldon Mills, interim executive director of strategy & competition at the FCA, said, ‘This ban reflects how seriously we view the potential harm to retail consumers in these products. Consumer protection is paramount here."
This announcement comes less than a week after the CFTC charged popular crypto derivatives exchange BitMEX with operating an unregistered trading platform and the DoJ filed criminal actions against the exchange’s owners, arresting its CTO.
The FCA estimates that retail customers will save around £53 million on account of this ban.
This is a developing story. Check here for latest updates.