UK’s Ban on Crypto Derivatives Goes Into Effect Today

6 January 2021

The Financial Conduct Authority’s (FCA) ban on the sale of derivatives and exchange-traded notes (ETNs) passed in October went into effect Wednesday.

  • The U.K. financial regulator has said it considers the products to be ill-suited for retail consumers due to the potential harm they pose.
  • The new regulation is being criticized by some in the crypto sector, who argue the ban is a setback and that retail investors should have access to the same opportunities as institutions.
  • The banning of cryptocurrency derivatives will drive retail users to unregulated platforms like Deribit and BitMEX, which will offer even less protection than the regulated players, argued Dermot O'Riordan, partner of Eden Block, a European venture capital firm focused on blockchain technology.
  • U.K.-based investment firm Hargreaves Lansdown took action ahead of the deadline and removed products such as the XBT bitcoin tracker from its platform.
  • “Investors are no longer able to buy these products through HL, but they can continue to hold investments that they already own, and can sell them when they wish to do so," said Danny Cox, head of external relations at Hargreaves Lansdown.

Read more: FCA Bans Crypto Derivatives for Retail Consumers in UK

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