back Back

FCA bans the sale of derivatives and ETNs to retail customers

By Megha Bhattacharya

October 08, 2020

  • Financial Conduct Authority
  • London

Financial Conduct Authority (FCA)The Financial Conduct Authority (FCA) recently published final rules for banning the sale of derivatives and exchange-traded notes. The organisation stated that the products cannot be reliably valued as these have a history of market abuse and financial crime, extreme volatility in cryptoasset price movements. There is also an inadequate understanding of cryptoassets by retail consumers and lack of legitimate investment need for retail consumers to invest. The ban will come into effect on the 6th of January, 2021.

FCA’s press release stated, “Unregulated transferable cryptoassets are tokens that are not ‘specified investments’ or e-money, and can be traded, which includes well-known tokens such as Bitcoin, Ether or Ripple. Specified investments are types of investment which are specified in legislation. Firms that carry out particular types of regulated activity in relation to those investments must be authorised by the FCA.”

Therefore, the FCA has made rules banning the sale, marketing and distribution to all retail consumers of any derivatives (i.e. contract for difference – CFDs, options and futures) and ETNs that reference unregulated transferable cryptoassets by firms acting in, or from, the UK. It estimates that retail consumers will save around £53m from the ban on these products.

Sheldon Mills, interim Executive Director of Strategy & Competition at the FCA, said, “This ban reflects how seriously we view the potential harm to retail consumers in these products. Consumer protection is paramount here. Significant price volatility, combined with the inherent difficulties of valuing cryptoassets reliably, places retail consumers at a high risk of suffering losses from trading crypto-derivatives. We have evidence of this happening on a significant scale. The ban provides an appropriate level of protection.”

Previous Article

October 08, 2020

Visa expands acceptance of B2B payments using Stripe Connect

Read More
Next Article

October 08, 2020

Capitec Bank selects HPS to bolster its payment activities in South Africa

Read More

IBSi Daily News Analysis

December 08, 2023

Financial Conduct Authority

Most consumers seek safer, easier payment verification, research reveals

Read More

IBSi FinTech Journal

  • Most trusted FinTech journal since 1991
  • Digital monthly issue
  • 60+ pages of research, analysis, interviews, opinions, and rankings
  • Global coverage
Subscribe Now

Other Related News

December 07, 2023

10 biggest FinTech Mergers & Acquisitions of 2023

Read More

December 05, 2023

Swiss crypto bank SEBA rebrands to AMINA Bank

Read More

December 04, 2023

Trulioo partners with Public for its UK launch

Read More

Related Reports

Sales League Table Report 2023

£1,500.00 / year

Know More
Global Digital Banking Vendor & Landscape Report Q2 2023

£1,500.00 / year

Know More
Wealth Management & Private Banking Systems Report Q3 2023

£1,500.00 / year

Know More
NextGen WealthTech: The Trends To Shape The Future Q4 2023

£500.00 / year

Know More
Treasury & Capital Markets Systems Report Q3 2023

£1,500.00 / year

Know More

IBSi Sales League Table

The industry acknowledged barometer of global banking technology vendor performance!
Get your copy now!
Get your copy now! IBSi Sales League Table 2023