In the UK, the Financial Services Authority FCA has issued a ban on trading in crypto derivatives such as Bitcoin Futures and Options. It comes into force on January 6, 2021 and affects providers and private customers alike. British market participants sharply criticize the ban.
In Great Britain a politically intended change of direction in dealing with parts of the crypto market is announced: The Financial Conduct Authority (FCA) has imposed a comprehensive ban on trading in crypto derivatives with effect from January 6, 2021. Affected are private individuals on the customer side and crypto exchanges and financial platforms with corresponding offers on the provider side. English providers such as CoinCorner or CoinShares consider the decision of the FCA to be wrong.
Background to the new Krypton rules in UK
The FCA cites futures, options, ETNs and CFDs as examples of crypto derivatives. Examples of underlying unregulated crypto currencies are Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP). According to the logic of FCA, markets lack transparency, customers lack knowledge, and high price fluctuations drive the risk of loss. It is expected that the ban will save citizens around 53 million pounds in losses. Not affected by the new regulations is the spot market with Bitcoin and Co. Professional market participants are also to remain allowed to trade.
For the British crypto exchange CoinCorner, CEO Danny Scott classified the FCA’s interventions in the market as a step backwards via blog post. The FCA has only recently begun to officially register crypto exchanges and related providers. His company will probably not be affected by the ban on crypto derivatives, as CoinCorner does not have such in its program. But he foresees problems for Revolut and eToro, for example, which would offer less real coins in various crypto products than contracts (CFD, contract for differences), which would make price movements a law.
At CoinShares, also based in the UK, CEO Danny Masters wrote to CoinShares in a customer letter. He sees a lobby against the crypto industry at work and the CFA as compliant executor. According to Masters, the United Kingdom must prepare itself for competitive disadvantages. He foresees a migration of customers to other providers in the EU and emphasizes that his company has achieved great transparency in the area of ETNs, for example, in terms of security and pricing.
Conclusion: Hard times for British crypto dealers
The business with the derivatives constitutes in the crypto industry on many days approximately half of the total volume, it is inquired thus substantial. The efforts to make Bitcoin Futures marketable in a regulated environment have led to the Bakkt project at the New York Stock Exchange. ETNs based on leading crypto-currencies are as much a normality at the Stuttgart Stock Exchange as related products at the Swiss Exchange.
In the cryptoscene the conviction applies in the reason that classical derivatives on basis of Bitcoin and CO. are a proof of it, how the industry will grow up and opens for broad clientele. Thus it needs little fantasy, in order to predict: British will find possibilities, in order to act on foreign markets. The British special way, which deviates also from intended European Union regulation, could harm however the British crypto industry more than the promised consumer protection reaches.
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