In a recent report by the Financial Times, The U.K’s Financial Conduct Authority (FCA) has signalled a detailed examination of the nature of cryptocurrency based derivatives.
A consultation will be launched in the first quarter of 2019 to decide upon the ban on the sale of crypto derivatives. Financial Times reported that the sale of crypto derivatives have become increasingly profitable for London-listed online trading platforms, citing IG Group and Plus500 etc. CryptoUK chair Iqbal Gandham quoted that the group was “pleased” by the proactive move, but said, “it is important that new rules are proportionate and do not put up excessive barriers, including for retail investors.”
The Cryptoassets Taskforce of the U.K government has also recently presented its concern about the risks associated with the crypto-based derivatives which can cause losses beyond the initial investments.
European regulators have complained that cryptocurrencies are risky, and repeatedly alleged that they help to fuel money laundering and terrorism while placing investor funds at the mercy of fraudsters. Their alarmist entreaties have ramped up pressure on governments to act, with many promulgating a series of regulations ostensibly to safeguard public funds and prevent the risk of financial instability.
The FCA, which has oversight of cryptocurrency derivatives because they are classified as financial instruments, rehashed similar concerns in its latest report. “The U.K. will not tolerate the use of crypto assets in illicit activity, and the authorities will take strong action to address these risks by bringing all relevant firms into anti-money laundering and counter-terrorist financing (AML/CTF) regulation,” it warned.
The latest report comes hardly two months after some U.K. lawmakers, calling for regulation, likened the cryptocurrency market to the “Wild West.”