UK Banned Bitcoin and Cryptocurrency Derivatives


The Financial Conduct Authority (FCA) has imposed a ban covering the UK market for derivatives based on cryptocurrencies such as Bitcoin. Financial institutions in the country will no longer be able to offer derivatives to individual investors in line with this ban, which will come into effect next year.

The Financial Conduct Authority (FCA), which controls the UK markets and is the UK’s Capital Markets Board (CMB), published an announcement explaining the risks of derivatives based on crypto currencies such as Bitcoin, Ether, Ripple. In the announcement, it was announced that financial institutions are prohibited from selling cryptocurrency derivatives to individual investors.

Cryptocurrencies have the following risks

FCA shared in its decision regarding cryptocurrencies what damage these could cause to individual investors. Explaining why it took this ban on cryptocurrencies, FCA listed them as follows:

  • Derivative bases do not have a certain foundation,
  • Manipulative transactions and financial crimes that may occur in secondary markets,
  • High volatility in crypto currency prices,
  • The individual investor does not have enough information about cryptocurrencies,
  • Lack of a regulated product that individual investors can turn to

For all these reasons, FCA banned the sale of any crypto option, futures contract to individual investors. FCA predicts that individual investors will save £ 53 million thanks to this decision. The ban is expected to come into effect on January 6, 2021.

What does the FCA decision mean?

The British regulator first announced in 2019 that it could ban cryptocurrency derivatives. However, this ban decision, which was only in the fictional stage at that time, has now been finalized.

This is forbidden; It means that investors who are not professional investors will not be able to trade derivatives based on crypto currencies such as Bitcoin, Ether, and XRP in the UK market. It includes futures, options and difference contracts, which are popular products of the forbidden cryptocurrency industry. Since the cryptocurrency market is not regulated by the FCA, this ban does not cover ordinary cryptocurrency trading. With these products, investors can take more risks than usual and make high profits as well as make losses.


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