WFE Urges FCA To Not Impose Ban On Crypto Derivatives Author: Ali Raza Last Updated: 16 June 2020 The UK is one of the most important financial markets, and several businesses strive to build a customer base in the country for that reason. Players in the cryptocurrency sector have been trying to make way into the UK market and they have achieved relative success. The UK’s Financial Conduct Authority (FCA) has not been welcoming to crypto related businesses and is working on regulations that restrict activity related to cryptocurrency. Top firms ask FCA to reconsider position on crypto derivatives The FCA has been hinting at a complete ban on crypto derivatives trading in the country. The regulator has completed a consultation process on the matter and it is likely that retail investors will be barred from buying crypto derivatives. The FCA believes that most of the traders that engage with these products have limited knowledge about them and the risks that come with their trade. This lack of information puts the traders at risk and many people end up losing their money when they trade crypto derivatives. As a result, the FCA is proposing a blanket ban on these products in the UK. A ban on crypto derivatives would be detrimental to the overall business of crypto exchanges that provide their services to people in the UK. It would mean that retail investors in the country can only trade the cryptocurrencies themselves and not any other products that are associated with them. In a bid to get the FCA to reconsider its position on these products, some top cryptocurrency exchanges have come out to ask the regulator to not place a ban on crypto derivatives. Some of the exchanges that have asked the FCA to reconsider include the Intercontinental Exchange, Nasdaq and the Chicago Mercantile Exchange (CME). The UK market is critical to these exchanges, and being blocked from providing crypto derivatives in the country would have far reaching effects on their businesses. The announcement from the exchanges came through the World Federation of Exchange (WFE) on Monday. Finding the right balance is the answer The exchanges asking the FCA to not impose a ban on crypto derivatives say that there is a need to find a balance between allowing the trade of innovative products and protecting consumers from the risks that come with the products. Nandini Sukumar, the CEO of the WFE, said that regulatory authorities such as the FCA need to create the right regulatory frameworks that will allow the market to grow to its full potential and benefit the consumers of the products on offer. The group of exchanges says that crypto exchange firms are well equipped to give their customers the protection that they need when they engage with crypto derivatives. The WFE says that it recognizes the risks that come with highly volatile products, but a blanket ban would not be an effective solution to the challenges that come with the assets. After the conclusion of its consultation processes, the FCA said that a final decision on the proposed crypto derivatives ban will be announced next year. Crypto related businesses will be hoping that the FCA comes up with a verdict that does not completely ban the offering of crypto derivatives to retail investors.