The U.K government has said that the FCA will make the final decision on crypto derivatives ban since it operates independently from the government.
October 22, 2019, | AtoZ Markets – The government of the United Kingdom has stressed that it is the duty of regulators, not the executive, to decide whether to continue with a proposed ban on certain crypto derivatives for retail investors.
Yesterday, the Economic Secretary to the Treasury John Glen responded to a series of questions related to the U.K.’s approach to crypto-assets, including the U.K. Financial Conduct Authority’s ongoing consideration of the ban.
Glen refrained from giving a determinate answer, underscoring that:
“The final decision […] is a matter for the FCA, which is operationally independent from government.”
U.K. Government endorses FCA’s approach
According to the UK Cryptoasset Taskforce Final Report — which was first published in July 2018 then and updated in October of that year — the FCA had proposed a blanket ban on selling crypto derivatives such as contracts for difference (CFDs) and Exchange Traded Notes (ETNs).
Glen noted this commitment and further emphasized:
“the government continues to endorse the approach set out in that the Cryptoasset Taskforce report as the right way to facilitate innovation while protecting consumers and firms.”
The questions to Glen took note of the number of formal complaints the FCA has received from consumers regarding the sale and distribution of ETNs that reference crypto assets.
In launching its consultation, the FCA had said it did not believe that non-professional traders could reliably assess the value and risks of crypto-based CFDs and CFD-like products.
This is purportedly due to the allegedly inherent difficulty of establishing a reliable basis to determine the value of the underlying assets; the prevalence of market abuse and financial crime such as hacks in the secondary crypto markets; the extreme volatility of the asset class; consumers’ insufficient understanding of crypto assets; the absence of a clear investment need for investment products referencing crypto assets.
The U.K. watchdog proposed at the time that retail investors would save between £267 million and £451 million per year.
While the FCA is still considering the restriction of CFDs for retail investors, it has otherwise concluded that major cryptocurrencies are “exchange tokens” which do not fall under the regulatory scope of the FCA.
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