As reported earlier, the United Kingdom’s financial regulator Financial Conduct Authority banned crypto derivatives exchanges. But the financial regulator ignored 97% of respondents to its consultation, according to its own policy statement. The 527 respondents included exchanges and companies involved in crypto-assets and derivatives, trade bodies, competent national authorities, legal representatives, and individuals. The 97% who opposed the FCA proposed ban argued that cryptocurrencies do have intrinsic value, retail investors are capable of assessing this value, and that other measures could achieve the desired results without applying a “disproportionate” ban.
Respondents accuse the FCA of cherry-picking its data.
In his blog, Attack of the 50 Foot Blockchain, crypto-skeptic David Gerard suggested that this was an example of “Crypto derivatives peddlers [thinking] they could spam the process, and they were wrong.” The responses came from a “range of stakeholders” covering the U.K. crypto industry. However, it would be more than a little incongruous if a consultation on crypto derivatives elicited a large response from parties with no stake in the outcome, as Gerard would seem to prefer. An article published on buyshares.co.uk also accuses the FCA of cherry-picking its data.
The FCA ban does not apply on trading cryptocurrencies.
Leverage limits introduced for contracts for difference on cryptocurrencies in 2018 have gone some way to reducing harm, the FCA said. Yet, investors were still losing significant sums on the products, and the restrictions “do not address the concerns we have with the underlying crypto assets and retail consumers’ inability to value these derivatives reliably.” The ban does not apply to trade the cryptocurrencies themselves. The financial regulator does not regulate Bitcoin and Ethereum.
Crypto-related regulations in most countries are still in a grey area. However, some countries have embraced the tech and innovation behind crypto assets and have provided the industry with favorable regulations.