HomeDIGITAL ASSETS REGULATORYregulation uk newsFCA suggests prohibition of crypto-derivative sales to individual investors

FCA suggests prohibition of crypto-derivative sales to individual investors

The Financial Conduct Authority (FCA) is considering banning the sale, marketing, and distribution of derivatives and exchange-traded notes (ETNs) that reference unregulated transferable cryptoassets to retail consumers in the UK. The FCA believes that these products are not suitable for retail consumers due to the inherent nature of cryptoassets, which lack a reliable basis for valuation. Additionally, market abuse and financial crime in the secondary market for cryptoassets, as well as the extreme volatility in cryptoasset prices, pose risks to retail consumers. The FCA estimates that banning these products could result in a potential benefit to retail consumers ranging from £75 million to £234.3 million per year. Christopher Woolard, Executive Director of Strategy & Competition at the FCA, stated that these complex contracts built on top of complex assets are unsuitable investments for retail consumers. The FCA has previously published rules restricting the sale of certain derivatives to retail clients and has issued consumer warnings about the risks associated with cryptoasset investments.

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