As of 6th January 2021, trading of crypto through a U.K.-regulated Forex / CFD brokerage has become a thing of the past But clients with open positions in any cryptocurrency derivative trade may Terminate the trade on or after 6th January 2021.
It has also became illegal for a broker conducting business in the U.K. to offer trading in cryptocurrency derivatives, including Bitcoin CFDs.
What does CFDs mean: A contract for differences (CFD) is a financial contract that pays the differences in the settlement price between the open and closing trades. CFDs essentially allow investors to trade the direction of securities over the very short-term and are especially popular in FX and commodities products.
Although buying and selling actual Bitcoins and other cryptocurrencies remains perfectly legal, as very few brokers offer this service, instead most of the brokers Offer clients to trade CFDs based upon the market prices of cryptocurrencies without actually having these cryptos.
The Conception for the banning of Trading of cryptocurrency CFDs has actually been as long as 6months ago, many professional analyst have in the past Adviced The FCA not to ban the trading of CFDs and as a matter of fact most of them where thinking The FCA will take a more different liberal approach rather than banning the trading of CFDs, instead The FCA has boasted that the ban will save retail customers an estimated ?53 million in losses.
The reasons for the banning of Trading of Cryptocurrency CFDs by FCA :
- Cryptocurrency has no reliable basis for it evaluation.
- Increase Prevalence of financial crime in secondary cryptocurrency market.
- High volatility in the prices of these cryptocurrency..
- Inadequate Education of these crypto assets by these retail customers.
- Lack of Proper legitimate investment need by these retail customers
Conclusion :
The banning of Crypto CFDs trading should in fact trouble anyone who believes that adults should be able to Decide with their own money within a fair and regulated market.
The FCA’s justifications for the ban simply do not hold any water. To be fair, there is a seedy and criminal side of crypto which should be shut down, and it may be that the FCA just was not able to hit this narrow target so they needed to take a bigger approach.
Fortunately, U.K. residents wishing to invest or trade in cryptocurrencies CFDs will be able to make alternative arrangements to continue doing so if they wish, even after the ban.
•Ahanonu publication © 2021•
