The UK’s Financial Conduct Authority (FCA) has officially banned the sale of cryptocurrency derivatives to retail users. The ban will be in effect as of January 6, 2021.
The UK’s Financial Conduct Authority (FCA) officially banned the sale of cryptocurrency derivatives and exchange-traded banknotes to retail users, for the first time more than a year after the proposal of such a ban.
The FCA said these products are “unsuitable” for retail consumers for a variety of reasons, including the “extreme volatility” of cryptocurrencies. The regulator said there is no legal investment need for retail consumers to invest in these products. Cyber attacks and cryptocurrencies ‘lack of a reliable port asset’ were reported as other reasons for the ban.
“This ban reflects how seriously we take the potential harm to retail consumers in these products,” said Sheldon Mills, FCA’s interim general manager of strategy and competition, adding: “Consumer protection is very important here.”
The ban will take effect on January 6, 2021. FCA estimates that retail consumers will save approximately £ 53 million (around $ 68 million) from the ban on these products.
FCA’s action will affect not only cryptocurrency exchanges, but also crypto brokers, investment platforms and financial advisors.
FCA said in a policy statement, “If your company carries out marketing, distribution or sales of related products in the UK or to retail customers from the UK, you must stop these activities until January 6, 2021.”
“Retail consumers with existing holdings can stay invested after the ban until they choose to end their investments. There is no time limit for this, and we do not want or expect firms to close retail consumer positions unless consumers request it. ”