As we already know, crypto markets can be extremely volatile and investors can lose money by not knowing what they are getting into. This is also a risk for financial crime according to the FCA.
Christopher Woolard, executive director of strategy and competition at FCA said:
“As with our work on the wider CFD and binary options markets, we will act when we see poor products being sold to retail consumers. These are complex contracts built on top of complex assets. Most consumers cannot reliably value derivatives based on unregulated crypto-assets. Prices are extremely volatile and as we have seen globally, financial crime in crypto-asset markets can lead to sudden and unexpected losses. It is therefore clear to us that these derivatives and exchange-traded notes are unsuitable investments for retail consumers.”
The purposed ban could affect financial products such as contracts for difference (CFDs), options and futures, and exchange-traded notes.
Britain’s FCA contrasts the current crypto-derivative rules within the EU, however, ahead of Brexit, Britain’s financial sector may suffer some more changes.
Following the news, Nouriel Roubini added:
“@cyptohayes spent half of the debate today defending his shady biz model of peddling 100x leverage crypto derivatives to retail suckers. Today UK’s FCA proposed to ban his thuggish BITMEX biz model. From buy buy to bye-bye for crypto derivatives in the UK”
