Financial Conduct Authority’s Crypto CFDs Ban Comes Into Effect Today
A ban imposed by the United Kingdom’s financial regulatory authority Financial Conduct Authority (FCA) on digital currency derivatives has now come into effect today, on the 6th of January. Now, users in the United Kingdom would not be able to conduct the sale of these cryptocurrency products.
Regulatory authorities in the country have been considering imposing a ban on cryptocurrency-related products for a longer period of time. After a longer period of consideration, the Financial Conduct Authority announced the cryptocurrency ban back in the month of October 2020. The ban was imposed on crypto products, including Exchange Traded Notes (ETNs) and cryptocurrency derivatives for retail clients while prohibiting them from trading with these products.
When the UK’s regulatory authority announced the ban, it stated that all of these crypto-related products are “ill-suited” for retail investors as, according to the FCA, they may pose potential harm to users in the country. While commenting on the ban back in October, the FCA’s interim executive director of strategy and competition Sheldon Mills said that their decision to impose a ban on crypto products shows their seriousness towards the protection of retail clients and how they consider these products harmful for them. Adding more to it, Sheldon Mills said that to ensure the protection of consumers in the country is their uppermost priority.
Many people in the digital currency space have criticized this FCA’s ban. They are of the view that retail customers should be given access to these digital currency products.
While showing a reaction to this ban, blockchain tech-centered European venture capital company Eden Block’s partner Dermot O’Riordan said that this crypto ban would lead users in the United Kingdom towards trading platforms that are not regulated, such as BitMEX and Deribit. And users will get very little protection from these exchange platforms as compared to the entities that are properly regulated.
After this ban was passed, many cryptocurrency firms and brokerages announced to stop providing digital currency Contract for Difference (CFD) services to users in the United Kingdom. Prior to the scheduled date of the ban on which it was set to go into effect, Hargreaves Lansdown, an investment company based in the United Kingdom, delisted some crypto products from its trading platform. The company’s Head of External Relations Danny Cox, said that they will not now allow users to use their trading platforms for purchasing these products following the UK’s crypto ban.
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