- The FCA will bar all providers of any type of derivatives that are linked to digital assets.
- The ban is warranted due to lack of transparency and the complexities surrounding crypto asset class.
The financial watchdog in the United Kingdom, the Financial Conduct Authority (FCA) in its newly released guidelines proposes the on all crypto-linked derivatives for sale in the retail market.
The paper released on July 3 says that that FCA will move to the issuers of any type of derivatives that are linked to digital assets including futures contracts, CFDs as well as exchange-traded notes (ETNs).
“We are proposing to ban the sale, marketing and distribution to retail clients of derivatives and ETNs referencing unregulated transferable cryptoassets,” reads a section of the paper.
According to the FCA, the move is warranted due to lack of transparency and the complexities surrounding crypto asset class. As a result, investors are not able to make proper informed decisions.
The Executive Director of Strategy & Competition at the FCA, Christopher Woolard clarified with regards binary options market:
“As with our work on the wider CFD and binary options markets, we will act when we see poor products being sold to retail consumers. These are complex contracts built on top of complex assets.”
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