FCA UK Defines Cryptocurrency Derivatives


The UK regulator does not see cryptocurrencies as commodities or currencies, according to the MiFID II. Nevertheless, in its latest regulatory decision, FCA UK defines cryptocurrency derivatives. 

9 April, AtoZForex – Earlier last week, the financial regulator of the UK, the Financial Conduct Authority (FCA) has issued a statement in relation to the ”growing number” of the UK firms that offer cryptocurrency derivatives. As per the European Union’s Markets in Financial Instruments Directive II (MiFID II), the UK regulator does not see cryptocurrencies as commodities or currencies.

Crypto derivatives might qualify as financial instruments

However, the regulator believes that the crypto derivatives might qualify as financial instruments. The FCA has stated:

“Firms conducting regulated activities in cryptocurrency derivatives must, therefore, comply with all applicable rules in the FCA’s Handbook and any relevant provisions indirectly applicable European Union regulations.

It is likely that dealing in, arranging transactions in, advising on or providing other services that amount to regulated activities in relation to derivatives that reference either cryptocurrencies or tokens issued through an initial coin offering (ICO), will require authorization by the FCA.”

FCA UK Defines Cryptocurrency Derivatives

Following on this, the UK financial markets watchdog has elaborated on the definitions of some cryptocurrency derivatives:

“cryptocurrency futures – a derivative contract in which each party agrees to exchange cryptocurrency at a future date and at a price agreed by both parties

cryptocurrency contracts for differences (CFDs) – a cash-settled derivative contract in which the parties to the contract seek to secure a profit or avoid a loss by agreeing to exchange the difference in price between the value of the cryptocurrency CFD contract at its outset and at its termination

cryptocurrency options – a contract which grants the beneficiary the right to acquire or dispose of cryptocurrencies”

The statement from the regulator has appeared just some time after the FCA has made public a note in regards to the cryptocurrency derivatives operator from Bulgaria, Olsson Capital. The company operates as a CFD, Forex and cryptocurrency brokerage. The UK watchdog has spotted the unauthorized company thanks to its website https://www.olssoncapital.com/.

The website is listing few contact details, those including the UK phone number. However, the company is reportedly operating at the following address: Carter Enterprises OU, 85 James Bouchier Blvd., Sofia, Bulgaria.

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