FCA Crypto Derivatives Ban Comes into Force

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  • The FCA crypto derivatives ban announced in October comes into force today
  • UK-based companies are now banned from offering futures, options, CFDs, and ETNs to British customers
  • The FCA crypto derivatives ban will not affect platforms based outside the UK

The Financial Conduct Authority (FCA) ban on UK crypto derivatives comes into force today, meaning that Brits can no longer legally trade cryptocurrency CFDs, options, futures and ETNs (exchange traded notes) offered by British companies. The UK crypto derivatives ban, announced in October last year, includes companies registered with the authority as a crypto-handling service, and has stoked fears that the ban will simply force those looking to utilize such instruments to use foreign platforms instead.

Licensed Actors Also Barred

The FCA crypto derivatives ban was announced back in October and is in an attempt to limit the exposure of cryptocurrencies to retail users while avoiding an outright ban. In practice, the ruling means that all crypto companies based in or working from the UK, even licensed actors, will not be allowed to offer cryptocurrency CFDs, options, futures and ETNs (exchange traded notes) to British citizens. The ruling includes:

  • Firms issuing or creating products referencing crypto assets
  • Firms distributing products referencing crypto assets, including brokers and investment platforms and financial advisers
  • Firms marketing products referencing crypto assets
  • Operators of trading venues and platforms

The good news for existing holders of such instruments is that they are allowed to continue to hold their positions until they expire, with no deadline implemented.

FCA Crypto Derivatives Ban Could Force Users Abroad

The FCA crypto ban was worked up after lengthy consultation and was announced shortly after the FCA warned traders against using BitMEX, although interestingly the ban doesn’t apply to non-UK entities. This means that British users of cryptocurrency exchanges and futures platforms based outside the region can still use their services, which are much more popular than British platforms anyway.

The FCA crypto derivatives ban will see some existing non-UK services affected, for example the likes of Coinbase and eToro will have to block UK-registered users from using its derivatives offerings, while platforms that only offer CFDs, such as Revolut, will have their entire crypto operations cut off from UK users.