The Financial Conduct Authority (FCA) has announced a ban on the sale of derivatives and exchange traded notes (ETNs) linked to cryptoassets to retail customers that it claims will save investors around £53m.
The City watchdog said from 6 January 2021, the sale, marketing and distribution to all retail consumers of any ETNs and derivatives such as contacts for difference, options and futures that reference unregulated transferable cryptoassets by firms acting in, or from, the UK will be banned.
The regulator added that any firm now offering these services to retail consumers is likely to be a scam.
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“This ban reflects how seriously we view the potential harm to retail consumers in these products,” Sheldon Mills, interim executive director of strategy and competition at the FCA, said.
“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.”
It comes after the FCA last month said it has made consumer investments its priority after seeing scammers take advantage of people’s search for yield.
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