The FCA’s recent decision to ban the sale of derivatives and exchange traded notes (ETNs) linked to cryptoassets to retail customers is a “setback” for the UK, according to Global Digital Finance (GDF).
The trade body suggested the decision has left many in the cryptoasset sector questioning the regulator’s willingness to collaborate with them and listen to the views of key market participants.
GDF also questioned the FCA’s decision to ban the products when no similar steps have been taken in Europe, the US or Asia. The body said it is critical of the regulator for “ignoring its own research findings” and the overwhelming majority of responses to its own consultation on the cryptoasset investment sector.
A survey conducted by the FCA, published this year, noted that the majority of cryptoasset owners are “generally knowledgeable about the product, are aware of the lack of regulatory protection afforded and understand the risk of price volatility”.
“The 2,681 participants in the FCA’s own survey offer firm evidence that its policy statement to ban the sale of certain cryptocurrency related products is perhaps misguided and leaves one wondering why the FCA disregarded its own evidence-based foundation,” said GDF head of regulatory affairs, Lavan Thasarathakumar.
GDF executive co-chair, Lawrence Wintermeyer, added: “The FCA’s decision to ban the sale of certain investment products linked to cryptocurrencies is yet another setback for the UK in trying to strengthen its position as a leading market for fintech and the digital asset markets.
“Some may wish to argue the moot point that the FCA’s ban is good for retail customers, good for the financial services market, and good for the UK. We would most certainly disagree with this.
“What is unarguable is that digital is global, and that digital finance is global. The effectiveness of jurisdictional bans of this nature is questionable in a world where customers can find the products and services they choose on the internet, wherever these products and services come from, and this choice often drives customers offshore.”
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