Crypto-currency derived products to be banned in UK from January 2021 for being akin to gambling

imagesource:calvinayre.com

Financial Conduct Authority (FCA), the watchdog in UK has stated that the Bitcoins and Crypto-currency derived products would be banned in UK from January 2021.

These derivatives would not be sold to retail customers in future because they are akin to gambling.

The FCA was of the opinion that sudden losses and unexpected losses resonate with gambling and put the consumers at a lot of risk.

The FCA stated that this would save 53 million euros a year if these derivatives are banned.

This ban implies that the betting on crypto-currency prices would not be allowed rather than the assets themselves.

The ban would be imposed from January 6, 2021 and seeks to prevent financial crimes that occur because of volatile nature of crypto-currencies.

Sheldon Mills, interim Executive Director of Strategy and Competition at the FCA, said, “Significant price volatility, combined with the inherent difficulties of valuing crypto assets reliably, places retail consumers at a high risk of suffering losses from trading crypto derivatives. We have evidence of this happening on a significant scale”, as reported by Sky News.

The justification for the ban also stems from the fact that prices of derivatives are based on speculations rather than per se intrinsic value of the assets, which amounts to gambling like activity.