- Crypto companies in the UK claim FCA’s announcement will slightly affect their business.
- Many of the traders might even shift to offshore exchanges to trade cryptocurrency derivatives.
Many cryptocurrency enthusiasts were saddened by the recent announcement from the UK’s Financial Conduct Authority (FCA), which informed about the prohibition of crypto derivatives sales to retail digital currency traders in the country. However, many experts and companies offering cryptocurrency services in the country have disclosed that the regulator’s ban may have less effect on the crypto market.
FCA banned crypto derivatives for small investors
The UK financial regulator warned on October 6 that retail investors/traders would be banned from accessing crypto derivatives services, starting from January 6 next year. The announcement also informed about the prohibition of ETNs or exchange-traded notes sales to these investors. At most, the development stemmed from the regulator’s concern to protect investors from certain risks.
However, reports today showed that the FCA announcement might slightly affect the UK’s cryptocurrency market, according to companies operating in the country. At first, the retail traders weren’t banned from purchasing or holding digital currencies in their wallets. Moreso, the FCA ban didn’t apply to other professional traders.
Exchanges claim impact will be minimal
IG Index, CMC Markets, and the Kraken-affiliated company, Crypto Facilities, were amongst the exchanges offering ETNs and crypto derivatives to these traders. Starting with Crypto Facilities, the exchange disclosed via its spokesperson that the regulator’s announcement would have a very minimal effect on their platform. IG Index made a similar statement, adding that the affected products do not constitute a significant part of their business.
Meanwhile, it is still assumed that some of these traders interested in trading the banned product might divert to using offshore platforms to access them. On this note, this could expose them to more risks, as there are chances that they could be trading on unregulated platforms, according to the CEO of Broctagon Fintech Group, Don Guo.