Global exchanges are begging the UK’s Financial Conduct Authority (FCA) not to ban the sale of cryptocurrency-based derivatives.
The World Federation of Exchanges said today that there is a need to find a balance between innovation and keeping consumers protected, Reuters reports. But it doesn’t think banning cryptocurrency-based investment products is the right answer.
“The WFE recognizes the volatility identified by the FCA in its consultation report and is supportive of ensuring that proper consumer protection is put in place as a priority for any new and relatively untested product on the market,” the WFE said in a statement.
Earlier this year, the FCA proposed a blanket ban on cryptocurrency-related investment products in an attempt to protect retail investors.
In July, the FCA said that cryptocurrency-based derivatives and exchange traded notes, were “ill-suited to retail consumers who cannot reliably assess the value and risks.”
Here’s the thing, exchanges that are part of the WFE are regulated, and so, investors are protected. The issue lies with the unregulated exchanges offering cryptocurrency derivatives.
By banning these products, it immediately makes the act of selling them unlawful and in theory should protect investors. But even the regulated exchanges will be affected if this happens.
At the moment, the FCA’s proposed ban is under consultation, meaning industry bodies have the opportunity to give their feedback.
According to Reuters, the FCA will announce the final rule changes in early 2020.
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