[LINK] Every single Bitcoin product banned in the UK as regulators crack down on crypto

[Kim Holburn]

> They can't stop you buying Bitcoin or other cryptocurrencies, but they can ban almost anything based on its price being sold to 
> people in the UK by firms operating here
>
>   * Any trading scheme based on Bitcoin's price is now banned in the UK(Image: AFP)
>
> Every firm operating in or out of the UK has just been banned from selling products based on Bitcoin's price to consumers.
>
> That's after City regulator the Financial Conduct Authority (FCA) announced new rules in an effort to stop honest Brits being 
> ripped off by those taking advantage of how few people understand this new breed of "cryptocurrencies".
>
> The FCA's Sheldon Mills 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."
>
> You can't ban Bitcoin, you can ban people selling access to it
>
> As an asset - albeit a digital one - the FCA can't stop people buying Bitcoin or other cryptocurrencies directly.
>
> However, it absolutely CAN ban people selling products based on their prices that are regulated by firms acting in, or from, the UK.
>
> As such it's stopping the sale of derivatives and exchange traded notes (ETNs) referencing certain types of cryptoassets.
>
> Broadly speaking - that's any product sold to the public that lets you make or lose money based on a cryptocurrency's current or 
> future price.
>
> The ban will come into effect on 6 January 2021.
>
> It also means, after that date, you can be pretty sure anyone offering you that sort of product is a scammer.
>
> "As the sale of derivatives and ETNs that reference certain types of cryptoassets to retail consumers is now banned, any firm 
> offering these services to retail consumers is likely to be a scam," the FCA said.
>
>
> The FCA brought the ban in as it said these products are "ill-suited to retail consumers" as it's not possible to reliably work 
> out their value or the risks they involve.
>
> More specifically there were problems thanks to the:
>
>   * inherent nature of the underlying assets, which means they have no reliable basis for valuation
>   * prevalence of market abuse and financial crime in the secondary market (eg cyber theft)
>   * extreme volatility in cryptoasset price movements
>   * inadequate understanding of cryptoassets by retail consumers
>   * lack of legitimate investment need for retail consumers to invest in these products
>
> Put together the FCA said that meant consumers could "suffer harm from sudden and unexpected losses if they invest in these products".
>
> "The FCA estimates that retail consumers will save around £53m from the ban on these products," the FCA said.
>
> */
> /*
>
> Anthony Morrow, co-founder of financial advice firm OpenMoney, said: “Today’s announcement is an important step forward in 
> protecting consumers from financial harm. ‘Investing’ in cryptocurrency is really no different to gambling with your cash.
>
> "These products are complex, sophisticated investments which offer a real possibility of losing all your money very quickly. 
> Unlike traditional investments in stocks and shares and investment funds, companies selling cryptocurrencies do not have to be 
> regulated by the Financial Conduct Authority (FCA) and they are not protected by the Financial Services Compensation Scheme or 
> Financial Ombudsman Service if something goes wrong.
>
> "I don’t believe they have a place in most people’s financial plans and am pleased to see the FCA tightening the regulations 
> around their sale."
>
> Cryptocurrency trading platforms were quick to point out that buying and selling the underlying assets was still allowed.
>
> CoinCorner chief executive Danny Scott said: “We need to make it clear that they’re banning products such as derivatives (CFDs, 
> futures, etc), they’re not banning the sale or use of Bitcoin."
>
> He added: “From our current understanding, this doesn’t affect Bitcoin exchanges like ourselves, but it will affect companies such 
> as . . . eToro that offer a CFD rather than the asset itself.”
>
> Edward Drake, head of compliance and operations at eToro, said: "The role of regulation is to protect consumers, which is what 
> this latest ruling from the FCA is aiming to do. 84% of eToro UK client positions are in the real underlying asset with no leverage.
>
> "As a result, we're confident eToro will be less affected by the new legislation than many others in the market and that our 
> clients will continue to enjoy uninterrupted access to crypto as real assets.
>
> "What this does highlight is people need to be aware of the risks associated with investing, do their homework on what they're 
> investing in and be confident they are investing on a secure and regulated platform. These rules apply across all asset classes 
> from crypto to stocks."
>
> Revolut told Mirror Money its customers would be unaffected, as it sells crypto currencies directly, and not through derivatives.
>

-- 
Kim Holburn
IT Network & Security Consultant
T: +61 2 61402408  M: +61 404072753
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