British authorities split on banning sale of crypto investment products

The argumentation decision-makers successful the United Kingdom got divided connected whether the sale, marketing, and organisation of derivatives and exchange-traded notes (ETNs) tied with cryptocurrencies should beryllium prohibited erstwhile it comes to retail investors. The Regulatory Policy Committee believes the measure, adopted successful 2021, to beryllium unjustified nether existent circumstances. 

The prohibition, enacted by the main British regulator, the Financial Conduct Authority (FCA), came into unit successful January 2021. Since that time, the companies could nary longer connection cryptocurrency derivatives products specified arsenic futures, options and exchange-traded notes, oregon ETNs, to retail customers.

Back astatine the time, the broad prohibition ignored 97% of respondents to the FCA’s ain consultation, who opposed the FCA projected the “disproportionate” prohibition and argued that retail investors are susceptible of assessing the risks and the worth of crypto derivatives.

On Jan. 23, 2023, the Regulatory Policy Committee (RPC), an advisory nationalist body, sponsored by the government’s Department for Business, Energy and Industrial Strategy, laid out its reasons against the FCA’s prohibition.

Related: UK crypto measure to restrict services from abroad

Using the cost-benefit analysis, the RPC evaluated an yearly nonaccomplishment from the measurement astatine astir $333 cardinal (268.5 cardinal British pounds). As the Committee states, the FCA didn’t supply a wide mentation of what specifically would hap successful the lack of the prohibition. It besides didn’t explicate the methodology and calculations to estimation the costs and benefits backmost astatine the time. On that basis, the RPC rates the prohibition astatine the “red” level, which means it is not acceptable for intent according to the review.

The antagonistic reappraisal by RPC doesn’t needfully pb to the nonstop reversal of legislation. However, fixed the Committee's ties to the Department for Business, Energy and Industrial Strategy, it whitethorn people the antithetic knowing of the tenable regularisation by the FCA and the government.

Last twelvemonth the British fiscal authorities made a fig of important efforts to foster the improvement of the integer industry. For example, the “designated crypto assets” were included successful the database of concern transactions that suffice for the Investment Manager Exemption.