Britain may ban some retail financial products based on bitcoin and other crypto assets and widen its regulatory net to capture potentially “illicit activity” that could harm consumers and markets, a government-backed taskforce reported on Tuesday.
The move, unveiled on Monday alongside the Budget, will see the Financial Conduct Authority consult in the first quarter of next year on a possible prohibition of CFDs, options and futures linked to crypto assets.
“The Taskforce has concluded that strong action should be taken to address the risks associated with crypto assets that fall within existing regulatory frameworks,” the report said.
The paper noted that the FCA has already supported ESMA’s restrictions on contracts for difference (CFDs) that reference cryptocurrencies, a measure that took effect last August 1.
The FCA said it has made clear that crypto assets have no intrinsic value and investors should, therefore, be prepared to lose every penny invested.
“The risk of trading losses can be exacerbated by product fees such as financing costs and spreads, as well as by a lack of transparency in the price formation of the underlying crypto assets,” the regulator mentioned at at a time when successful financial firms in the UK, including Plus500 and IG Group, are showing higher revenues from crypto-derivate trading.