The U.K.’s Pecuniary Conduct Authority (FCA) is considering a ban on some cryptocurrency-based derivatives, a senior management has said.
Speaking at an event in London covering the regulation of cryptocurrencies, Christopher Woolard, administrative board member and director of strategy and competition at the FCA, said that the watchdog has disturbs that retail investors are being sold “complex, volatile and usually leveraged derivatives products” based on cryptocurrencies with “underlying supermarket integrity issues.”
He added:
“The FCA will … consult on a prohibition of the sale to retail consumers of derivatives allusion certain types of crypto assets (for example, exchange tokens), encompassing contracts-for-difference, options, futures and transferable securities.”
Exchange tokens, he added, are the regulator’s “non-partisan” way of describing cryptocurrencies, which “utilize a DLT platform and are not issued or backed by a key bank or other central body,” and “do not function as money.”
By the end of the year, the FCA also outlines to consult on which crypto assets fall within its existing regulatory despatch and those that don’t, said Woolard. Follow up consultation would then look at whether the medium needs a broader remit to “capture crypto assets that have on the agenda c trick comparable features to specified investments.”
Elsewhere in the speech, the executive concert-master also said the U.K. Treasury will make a “comprehensive” response to the use of crypto assets in monetary crimes by meeting and going beyond the requirements of the fifth EU Anti-Money Legitimating Directive (5AMLD).
“On this, [the Treasury] will first consult and then legislate on how to exchange 5AMLD and broaden the scope of anti-money laundering and counter-terrorism financing dictate further,” he said.
Woolard concluded by saying, with the FCA’s Cryptoassets Taskforce assuming that cryptocurrencies bring new challenges to traditional financial regulation, the Exchequer now plans to further study if regulation can “meaningfully and effectively” address the gambles they pose and what, if any, solutions might be arrived at.
“[The Treasury] longing consult in early 2019 on whether and how exchange tokens, as well as interrelated actors such as exchanges and wallet providers, could be regulated effectively,” he pronounced, adding it will also seek collaborations with international counterparts to lecture the issue.
City of London image via Shutterstock