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UK’s FCA Bans Retail Crypto Derivatives Sales by 2021

  • FCA finalizes the ban of crypto derivatives and ETNs sale to retail consumers.
  • The ruling receives backlash from the community.
  • Crypto exchanges like CoinCorner and direct purchase of BTC, ETH will not be affected.
  • Other countries like Japan, Canada, and the US continue to support crypto adoption.


UK’s Financial Conduct Authority (FCA) finalized the ban regarding the sale of derivatives and exchange-traded notes (ETNs) to retail consumers. Taking effect in January 2021, the financial regulating body implements the policy for consumer protection.

To address any harm from sudden and unexpected losses caused by cryptocurrency-based products, FCA decided to forbid the sale, marketing, and distribution of any derivatives such as options and futures as well as ETNs referencing from crypto assets.

Sheldon Mills, FCA’s interim Executive Director of Strategy & Competition, explained that this ban reflects how seriously they view any potential damage driven by this kind of investment.

Significant price volatility, combined with the inherent difficulties of valuing cryptoassets reliably, places retail consumers at a high risk of suffering losses from trading crypto-derivatives.

Despite the good intentions behind FCA’s prohibition, its ruling has received a backlash from the UK community. Some are saying that the “UK is so sh*t” and that this ban may lead to “los[ing] jobs and talent in the UK to other foreign states.”

In parallel, Global Digital Finance’s Executive Co-chair Lawrence Wintermeyer commented that,

This ban kills off what could have been a new investment opportunity for sophisticated retail investors. It also sends a negative signal regarding the UK’s stance on crypto assets.

Yet, FCA is firm that there is growing evidence that crypto assets are causing harm to consumers and markets. They even estimated that retail consumers will save around £53 million as a result of this ban.

In particular, those that would be affected by this regulation next year include brokers and investment platforms, financial advisers, and operators of trading venues.

Despite this, CoinCorner, one of the UK’s oldest and leading Bitcoin exchanges, stands that this ban won’t have any impact on their operations. “It will affect companies such as Revolut and eToro that offer a CFD rather than the asset itself,” says CoinCorner CEO Danny Scott.

In spite of ceasing the sale of derivatives and ETNs, people can still buy Bitcoin, Ethereum, and other cryptocurrencies directly. With this in mind, the reduction of crypto activities in the country may not have significant implications in crypto prices.

Aside from the UK, India also plans to curb crypto trading on its jurisdiction with a new law. On the other hand, countries like Japan, Canada, and the US continue to support crypto adoption on a global scale.

CoinQuora Staff

CoinQuora is an online publication that aims to educate about news, exchanges, and markets in the cryptocurrency and blockchain industry

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