Watchdog threatens retail ban on crypto trades
The Financial Conduct Authority this morning proposed a ban on selling derivatives based on bitcoin to retail customers.
The watchdog said that crypto assets, including bitcoin, have extremely volatile prices.
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It thinks such products are “ill suited to retail consumers who cannot reliably assess the value and risks of derivatives or exchange-traded notes that reference certain crypto assets.”
Meanwhile, the FCA said that the secondary market for crypto assets is prone to “market abuse and financial crime”.
It also warned that retail customers have a low understanding of the assets. Meanwhile, they do not clearly need investment.
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“Most consumers cannot reliably value derivatives based on unregulated cryptoassets,” said Christopher Woolard, executive director of strategy and competition at the FCA.
“Prices are extremely volatile and as we have seen globally, financial crime in crypto asset markets can lead to sudden and unexpected losses. It is therefore clear to us that these derivatives and exchange traded notes are unsuitable investments for retail consumers.”