The UK’s financial regulator, the Financial Conduct Authority (FCA), has cited “integrity issues” as a reason for considering placing a ban on cryptocurrency derivatives in an event in London of 20 November.
The comments were made by the FCA’s executive director of strategy and competition Christopher Woolard, addressing invited guests at the Regulation of Cryptocurrencies event in the capital.
The UK government’s Cryptoassets Task Force met for the first time on 21 May as part of the country’s plan to regulate the cryptocurrency and blockchain space and since then has been reporting back its findings regarding the regulation of cryptocurrency in the UK.
One of the functions of the task force is to examine the risks of blockchain technology and mitigate these while examining the benefits of ledger technology in financial services. The Cryptoassets Task Force comprises representatives from the UK Treasury and the Financial Conduct Authority (FCA).
The idea of a ban is a recent development only surfacing last month for the first time, among criticism that the UK had been slow in addressing the growth of cryptocurrency adoption in the UK without adequate safeguards and guiding legislation for the industry.
The focus, according to Woolard, would be on what the FCA has called “cryptocurrency contracts-for-difference (CFDs)” which would be likely to cover “options, futures and transferable securities”. He mentioned in his speech that UK’s regulators were particularly concerned “…that retail consumers are being sold complex, volatile and often leveraged derivatives products based on exchange tokens with underlying market integrity issues”.
In their findings, the task force had categorized CFD’s into three types, Woolard noted, constituting “exchange tokens” such as Bitcoin (BTC), security tokens and utility tokens. He also noted that in case of unauthorized use of tokens, the FCA could initiate what he termed as “one of the most comprehensive responses globally to the use of crypto assets for illicit activities”.
Despite the FCA’s comments regarding the future of derivatives at the event, many surveys continue to illustrate Britons’ growing awareness and use of cryptocurrencies with 15.8 million UK residents owning or considering Bitcoin. A July study revealed up to 3 million people have invested in Bitcoin in the country through online trading platforms.
The technology behind cryptocurrencies is burgeoning in the UK. The country is known as a driving force in blockchain research and the spread of solutions is being utilized by numerous companies, as the country becomes one of the world’s most significant and dynamic fintech hubs.
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