Cryptocurrency Derivatives Could Soon Be Banned by Regulators: The Economist

Libra Coin News
Thu, 10/03/2019 - 16:35
Alex Dovbnya
The Economist argues that the FCA and other regulators will start banning crypto derivatives to protect retail investors  
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According to a recent article published by The Economist, regulators around the globe could soon start stepping up their effort when it comes to outlawing cryptocurrency derivatives. In such a way, they want to protect retail investors from the mercurial market. 

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FCA’s crackdown

The Financial Conduct Authority (FCA) proposed a ban on cryptocurrency futures, options and other products that allow investors to bet on the prices of the volatile asset class back in July. However, it needed more time to consult with financial regulators. 

The British watchdog is expected to voice its verdict at the beginning of 2020, but the Economist states that the FCA is unlikely to back down from its plan to crack down on crypto derivatives.

The main reason why regulators are up in arms about these exotic investment vehicles is because of uninitiated retail investors who can get easily burned while chasing gargantuan gains.

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Playing with fire  

British investors alone lost a whopping $492 mln on crypto derivatives throughout the 2018 crypto winter. It has been estimated that this number could be dwindled to about $200 mln if prohibitive measures are implemented.

However, there is no guarantee that his ban could be effective. Jacqui Hatfield, who spearheads the fintech and technology practice for London-based law firm Orrick, is skeptical of the effort, calling it “a knee-jerk reaction.”

Crypto-derivatives are just as risky as other derivatives.”  

After all, risk-loving traders can always turn to unregulated trading where Seychelles-based BitMEX rules the roost.      

About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with an extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets.

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