CoinShares, the largest manager of digital assets in Europe, has responded to the ban on the sale of crypto ETNs to retail investors, proposed by the Financial Conduct Authority of the UK. The FCA has cited the high volatility, lack of intrinsic value, and price discovery as the main reasons for proposing a prohibition that can protect the retailers from adverse effects. However, CoinShares has risen to protest against the rule.
The firm affirms that the ban should be restricted to the Commodity Deposit Forms (CDFs) and other high margin derivative products, and omit the 1:1 ETNs. It also points out the prohibition free zone the other ETNs, including the natural gas and oil, witness despite possessing similar volatility risks.
The released response states, “ETNs are regulated products, listed on recognized exchanges, traded through regulated brokers and subject to the extensive disclosure and transparency requirements required by the Prospectus Directive and other regulations governing listed securities.”
The UK financial regulator also noted the loss inducing tendencies of cryptocurrencies to which CoinShares reverted with a profitable performance of the crypto derivatives. It also argued that most retailers live in the dark, unaware of the utility of digital coins. In retort, the firm has cited that crypto is much more understood than other derivatives like rhodium or EU carbon credits.
Retail investors have primarily led the crypto era. Do you think FCA’s proposal is justified?