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Ban on bitcoin (BTC) derivatives in the UK: what will the impact be?



We do not expect any material impact as a result of the FCA announcement



12.Oct.20 9:55 AM
By Shawn Highstraw
Photo CyberDefenceMagazine

   274

Ban on bitcoin (BTC) derivatives in the UK: what will the impact be?
Last Wednesday the news came out that the UK financial regulator will ban bitcoin (BTC) and cryptocurrency derivatives. But how big can the impact of such a ban be on the market?

From 6 January 2021, trade in cryptocurrency derivatives in the UK will be prohibited for private investors. According to the Financial Conduct Authority (FCA), these derivatives would be unsuitable for this type of investor. Among other things, knowledge of these products would not be sufficient to allow investors to trade in such products safely.:

“This ban reflects how seriously we see the potential damage to private customers of these products. Consumer protection is paramount here."- Says the FCA.

A ban is, of course, never beneficial if it reduces the flow of money into the market. However, the impact of this ban is lower than one might think at first. In a number of reactions, companies tell Coindesk that it's not so bad.:

“We do not expect any material impact as a result of the FCA announcement, as these products form a very small part of our diversified and global activities, [...] the impact of the turnover resulting from the FCA restrictions would be less than 1% of the total turnover of IG Group.”

In addition, some of the companies now expect consumers to look for crypto derivatives outside the UK's borders. According to the CEO of Broctagon Fintech Group, Don Guo, there is even a real chance that they will now start trading in derivatives on unregulated exchanges, thus putting them at more risk.



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