The cryptocurrency and financial landscape of the United Kingdom have experienced a bit of a seismic shift as of late, thanks to widespread reports that the Financial Conduct Authority wants to ban the sales of cryptocurrency derivatives. Many within the space would go scrambling for answers. However, nothing concrete has been gotten, and that trend continued when John Glen, the Economic Secretary to the Treasury, was asked to comment on the matter by Philip Davies, a Member of Parliament for Shipley.
Keeping developments under wraps
According to a report by Finance Feeds on October 21, Glen was asked several questions about the FCA’s approach to developments in the country’s cryptocurrency space. But, when it came to the issue of derivatives being banned, he tried his best to evade the questions.
Per the news medium, Glen said, “The final decision […] is a matter for the Financial Conduct Authority (FCA), which is operationally independent from government.”
Back in July 2018, a final report from the U.K. Cryptoasset Task Force involved a claim from the FCA that it would publish a consultation paper on potentially banning cryptocurrency derivatives such as exchange-traded notes and contracts for difference. As regards this, Glen noted that the government will be continuing to endorse the approach that had been recommended by the task force, especially touching the perceived right way to enhance innovation and still ensure the protection of firms and consumers.
However, apart from just evading questions on crypto derivatives and a potential ban, Finance Feeds notes that he also tried to avoid other questions as well. Davies reportedly asked about the assessment from the Chancellor of the Exchequer as regards the proposed FCA ban on retail investors that were signed up with FinTech firm Revolut.
The parliament member also wanted to know about the Exchequer’s assessment of how this ban on crypto derivatives could affect the perception of the United Kingdom as a global hub for the financial and technology industries.
A blanket ban really isn’t the best solution
Glen might not have answered this, but the issues are definitely important. Banning cryptocurrency derivatives could prove to be detrimental to the United Kingdom. The demand for financial products in the crypto space seems to be increasing, especially from institutions.
Long positions held by institutional accounts at the CME have been rising again in October.
For reference, institutions include pension funds, endowments, insurance companies, mutual funds & portfolio/investment managers whose clients are predominantly institutional. pic.twitter.com/96N2XZwo9e
— skew (@skew_markets) October 20, 2019
Skew Markets, a popular cryptocurrency data analyst, posted on Twitter earlier this week that institutional investors had made long positions in Bitcoin futures worth over 1,000 BTC in October alone.
Considering the interest and performance of cryptocurrency financial products, the U.K. would have to rethink its strategy on regulating crypto derivatives. Of course, there is the question of investor protection at hand. However, market performances have shown that by banning these products, the U.K. could be losing out on a lot of money, and it would essentially be sending a message to interested investors that it isn’t prime for investment.
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