United Kingdom’s financial regulator, the Financial Conduct Authority (FCA), which first proposed such a ban in July 2019, said prohibition would save 53 million pounds ($69 million) a year in losses for retail investors once it comes into force on Jan. 6. Customers with existing holdings will be allowed to remain invested as long as they wish. Shares of the spread-betting firms that offer the crypto derivatives slid in London trading. CMC Markets Plc declined as much as 6.2%, Plus500 Ltd fell as much as 3.7%, and IG Group Plc dropped as much as 3.7%.
The 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 trading the cryptocurrencies themselves. The FCA does not regulate Bitcoin and Ethereum.
Sheldon Mills, the interim executive director of strategy and competition at the FCA, said that significant price volatility, combined with the inherent difficulties of valuing cryptocurrencies reliably, places retail consumers at a high risk of suffering losses from trading crypto-derivatives.
Crypto regulations in most countries remain in a grey area.
Cryptocurrency-related regulations in most countries are still in a grey area. However, some countries have embraced the tech and innovation behind crypto and have provided the industry with favorable regulations. South Korea earlier this year passed legislation making crypto trading legal in the country. Crypto regulations in the United States are also unclear in the most number of states. Earlier, US CFTC said that they are planning on making a ‘holistic framework’ for the crypto industry.