The Financial Conduct Authority (FCA) has published rules today (6 October) banning the ‘‘ill-suited’’ sale of crypto-derivatives to retail consumers due to the potential harm they pose.
These products were not considered suitable for consumers due to the “extreme volatility in cryptoasset price movements, inadequate understanding of cryptoassets by consumers and the inherent nature of their underlying assets”.
The FCA estimates consumers will save around £53m from the ban on these products.
The ban will come into effect on 6 January 2021.
Sheldon Mills, interim executive director of Strategy & Competition at the FCA, said: ‘‘This ban reflects how seriously we view the potential harm to retail consumers in these products. Consumer protection is paramount here.
‘‘Significant price volatility, combined with the inherent difficulties of valuing cryptoassets reliably, places retail consumers at a high risk of suffering losses from trading crypto-derivatives.’’
He added: ‘‘We have evidence of this happening on a significant scale. The ban provides an appropriate level of protection.’’