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UK ban in cryptocurrency has now been implemented

In the United Kingdom, the ban of selling cryptocurrencies has now been implemented this Wednesday, January 6, 2021. The ban was declared by the Financial Conduct Authority (FCA) back in October 2020 where there was a long period of consultation and deliberation whether the crypto ban will be pushed through.

The FCA went on to ban digital currencies in the country because of the instability of crypto assets, risks of cyber fraud or theft, and the consumers’ insufficient understanding. This includes prohibitions in selling, marketing, and distributing to retail investors of crypto-referencing ETNs.

‘These features mean retail consumers might suffer harm from sudden and unexpected losses if they invest in these products,’ FCA stated in the published final rules of the ban.

The ban is expected to have a market loss of £234.3 million in the crypto industry. Crypto specialist asset managers such as CoinShares also expect to feel the impact of the ban. They have more than $3 billion in assets under platforms and exchanges.

Head of external relations at British financial service company Hargreaves Lansdown, Danny Cox stated ‘The FCA’s October Policy Statement made clear their stance on these products. We firmly believe in protecting investors and helping them reach good outcomes, and so [we] decided to implement restrictions in advance of the FCA’s deadline as this is in the best interest of our clients.’

ETNs or exchange-traded notes is a reference for certain types of digital assets that helps retail consumers. Many critics expressed their concern for other consumers aiming for unregulated sales or offshore, due to these being unattainable by FCA. They might make use of other platforms like Deribit and BitMex that are unregulated with only minimal protection.

Additionally, FCA said that the ETNs are inappropriate to retail consumers because of the evidence of market abuse, financial frauds, and scams in the crypto industry. Back in April, there was already a similar report showing that the binary options are stopped. Christopher Woolard, the FCA Director at the time, described crypto’s binary options as gambling products acting as financial instruments.

One of UK’s traditional financial organizations, Hargreaves Lansdown (HL) also made some tweaks in their operations for their cryptocurrency products and shares. Their external relations chief, Danny Cox stated in an interview that ‘Investors are no longer able to buy these products through HL, but they can continue to hold investments that they already own, and can sell them when they wish to do so.’

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