The FCA ban on the crypto derivatives sales to retail investors has set the tongues wagging.
However, it is not a mystery. After a consultation process that has closed on Oct. 3, 2019, with 97% of participants opposed to the exclusion, the U.K. financial regulator still has proceeded to give the ban, completely disregarding the overwhelming public input.
In the defense, the FCA had claimed to be protecting the consumers and further “enhanching the integrity” of the British financial system. While within the U.K. crypto industry and somewhere else are then impressed, it is perhaps with a good reason. Last Tuesday, the FCA announced a ban on selling the crypto derivatives to retail clients since Jan. 6, 2021.
It was proposed last July 2019, the ban on the derivatives based on the virtual currencies like when bitcoin (BTC) generated a total of 527 responses when the regulator started asking for views on the matter that happened later that year.
The report says 97% of the respondents have opposed the proposal. They have interrogated the regulator’s declarations alleging that the crypto assets lacked an intrinsic value as well as the FCA’s idea, assuming that retail investors are inexperienced, unable to correctly valuing digital assets. Respondents have argued that a ban would be uncooperative and “disproportionate,” signifying, instead, that the FCA achieves its goals by other means.
Derivatives proponents have pulled out several locations to support their position. For instance, they contended that the digital assets are nearly appreciated since they have been acknowledged as a means of payment for different goods and services. This includes the top companies like Starbucks and Microsoft that accepts bitcoin through a service offered by Bakkt.
But the FCA will have none of that. It roared:
A Coinshares executive remarked: “We see the FCA ban as further evidence that the U.K. is turning its back on innovation in digital assets and on regulatory coordination with other jurisdictions. It remains the only Western jurisdiction to ban digital assets based on the false belief that they have ‘no intrinsic value.'”
Don Guo, the chief executive officer of brokerage firm Broctagon Fintech, responded:
Adam Ettinger, the companion at fintech firm Fisher Broyles, said: “This (ban) will push trading activity on cryptocurrency derivatives out of the U.K. to exchanges that are not regulated by the FCA, the U.S. CFTC, or similar regulatory agencies in jurisdictions that are known for their regulated capital markets.”
Additional commentaries were not as hard-hitting.