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UK’s ban on crypto derivatives trading won’t affect the users much

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Crypto Business World

CBW -External Analyst

Oct, 16 2020

Oct, 16 2020

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The promotion of investment ICO bitcoin derivatives and other digital assets to retail traders is being prohibited in the United Kingdom by the Financial Conduct Authority. It is an additional blow to the flourishing STO cryptocurrency world, after the US authorities impeached the proprietors of BitMex, top derivatives exchange for functioning without registration and supposedly failing to observe AML, anti-money-laundering guidelines.


The FCA is thwarting retail traders from purchasing and dealing the likes of digital asset futures and options generally used to hedge their stakes on an underlying crypto. For instance, buying an option and selling them if the values decrease by 10%, offering you insurance if the market goes against you. The FCA stated it was bringing the prohibition as amateur traders are at danger of sudden losses. The thought process is amateurs do not comprehend the market so lots of financial crime can be pulled off harming their interests, also cryptos are unpredictable and hard to evaluate.


The boycott is not broadened to professional investors and institutional companies like hedge funds, which can handle dodgier financial cryptos than the general public. The ban protects people drawn to token asset offering BTC thinking it is the money of the future, following the dramatic news reporting about the upsurge and dips. Many trading portals provide lucid entry into crypto and social media influencers encourage commoners to undertake complex trading.

4% of UK adults own some sort of crypto. 75% have less than £1,000 holdings qualifying as retail traders. As of 2019, Quantity of UK investors in crypto derivatives is unknown but these financial products are about 20% of the crypto market in. Since the retail traders are not the key audience of derivatives and with majority users availing non-UK centered platforms, it’s possible to easily stay away from the FCA jurisdiction. The prohibition can lower annual losses ranging in £19 million and £101 million.


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Crypto Business World

CBW - External Analyst

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