The Financial Conduct Authority (FCA) ban on crypto products will officially be in full effect today. The authorities had earlier announced the ban around October last year, stating that crypto-based products were not suited for retail customers because they lack a reliable valuation, are prone to price volatility, are known to be prevalent for crime, as well as the fact that retail customers lack proper understanding for such products.
FCA: This Decision Is to Protect Customers
According to the FCA, customers were prone to suffering from unexpected losses from these crypto products due to their lack of knowledge.
The ban by the authorities covers the sale, marketing, and distribution of crypto derivatives like futures and options too. Moreover, the FCA noted that any firm caught making sales of such products after the ban would be labeled as a scam and would be sanctioned appropriately.
The acting executive director at FCA, Sheldon Mills, noted that the outright ban was needed as a means of protecting the users. According to him, the ban reflects the view of the authorities on how they feel the products are harmful to their retail customers.
Crypto Proponents Took Jabs at FCA
The FCA’s decision to ban crypto derivates in the country received a lot of criticism across the industry.
Jason Brown of Komodo derided the UK for not getting its decision across the board with authorities in the US, stating:
“When the ban was passed by the UK government in October, there was no coordination with officials in the US, EU, or any other regions around the world.”
He went on to add that the authorities in the US had already been regulating the derivatives market for both retail and professional users for the past three years now. And that blockchain regulations need to be consistent “across jurisdictions”.
Dermot O’Riordan of Eden Block had opined that the authorities’ inability to properly regulate the industry is likely the reason why they chose the easy path, which is an outright ban.
“FCA has chosen to abdicate rather than lead.”
Dermot went on to note that the retail customers the FCA are trying to protect could still move toward platforms that were unregulated, thereby, leaving the authorities’ decision looking all the more wrong.
However, the FCA predicts that their decision is necessary for the greater good of retail customers, as it would save them over $68 million thanks to the ban.