The UK government has stressed that it is up to regulators, not regulators, to decide whether to continue with the proposed ban on certain cryptographic derivatives for retail investors.
Finance Feeds reports that on 21 October the Secretary for Economic Affairs at the Treasury, John Glen, answered a number of questions concerning changes in the UK's approach to cryptographic assets, including the ongoing deliberations of the UK's Financial Services Authority (FSA).
In the UK Final Report of the Task Force on Cryptosystems - first published in July 2018 and then updated in October of the same year - the FCA made a public commitment to publish a consultation paper on a potential ban on cryptographic derivatives such as Contracts for Difference (CFDs) and Stock Exchange Debt Instruments (ETNs).
Financial Feeds reported that questions to the Secretary of Treasury had drawn attention to the number of formal complaints that the FCA had received from consumers in relation to both the sale and distribution of ETNs relating to cryptographic assets.
When opening the consultation, FCA stated that it did not believe that non-professional traders were unable to reliably assess the value and risks of CFDs and cryptographic-based CFD-like products.
This is allegedly due to the allegedly inherent difficulty in establishing a reliable basis for determining the value of the underlying assets; the predominance of market abuse and financial crimes such as break-ins in secondary markets for cryptographic products; extreme volatility of the asset class; insufficient consumer understanding of cryptographic assets; and the absence of a clear investment need for investment products related to cryptographic assets.
The FCA then proposed that retail investors save between GBP 267 million and GBP 451 million annually.
While the FCA is still considering restricting CFDs to retail investors, it otherwise came to the conclusion that the main cryptographic currencies are 'exchange-traded chips' that do not fall under the FCA's regulatory scope.
In September, the UK regulated public exchanges Coinshareres claimed that the FCA had not provided sufficient evidence to justify the proposed prohibition of ETN's use of cryptographic currency.
Earlier this month, the World Federation of Exchanges, the global trade association of publicly regulated exchanges, called on the FCA not to apply the CFD ban.
