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UK to consider ban on sale of crypto derivatives in consultation by government-backed taskforce

Published: 13:36 31 Oct 2018 GMT

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The FCA said one of the key risks of cryptoassets is the potential for illicit activity

The UK is considering a ban on the sale of cryptoasset derivatives to retail consumers due to concerns about the risks associated with such investments.

The ban on crypto derivatives, including contracts for difference, options and futures, will be explored in consultations to be held by the first quarter of 2019.

The consultation will be led by the UK Cryptoasset Taskforce, which includes representatives from the Financial Conduct Authority (FCA), the finance ministry and the Bank of England.

The taskforce announced the plans for the consultation in a report on Tuesday, calling for closer scrutiny on the trading of cryptoassets.

 “The taskforce has concluded that strong action should be taken to address the risks associated with cryptoassets that fall within existing regulatory frameworks,” the report said.

“Further consultation and international coordination is required for those cryptoassets that pose new challenges to traditional forms of financial regulation, and fall outside the existing regulatory framework,” it added.

Ahead of next year’s consultation, the taskforce intends to publish draft guidelines by the end of this year to clarify which cryptoassets fall within and outside existing regulation and whether the regulatory net should be cast wider.

In a separate statement about the taskforce report, the FCA said it has made it clear it thinks cryptoassets have no intrinsic value and investors should be prepared to lose money.

“Whilst the taskforce appreciates that cryptoassets have the potential to bring benefits to markets, firms and consumers, there remains considerable risks that HM Treasury, the Bank of England and the FCA will take action to mitigate.

“Key risks include: harm to consumers and market integrity, the use of cryptoassets for illicit activities and potential future threats to financial stability.”

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