UK FCA derivatives ban signals disapproval of crypto as a whole, CoinShares exec says

Following the definitive ban of cryptocurrency derivatives in the United Kingdom, cryptocurrency companies in the country shared their thoughts on the matter with Cointelegraph.

Crypto ETNs fell under Tuesday's broad ban by the Financial Conduct Authority, along with products like crypto futures, options, CFDs and other derivatives.

The ban does not impact direct crypto trading in any way, which remains open to retail investors and often features leverage as well, albeit with milder amplification.

"We are extremely disappointed by the FCA's decision to include delta 1 ETNs in its ban on distribution of crypto derivatives to retail investors in the UK. We and many other industry participants put forward a number of reasons why such a ban would be ill-advised and would not benefit retail investors. Unfortunately, the FCA ignored those reasons, or dismissed them with little additional information."

According to Lansing, the ban will have the opposite intended effect, as it will "Simply drive UK retail investors to unregulated crypto exchanges." He claimed that even the FCA believes these have "Far fewer protections than the regulated ETNs offered by CoinShares and other providers."

Danny Scott, CEO and Co-Founder of U.K. crypto exchange CoinCorner, told Cointelegraph that the FCA is "Comfortable with [crypto] assets and seemingly have a pro stance, they're just not comfortable with companies packaging them up in traditional trader focused products that the everyday person doesn't understand."

"The FCA made it clear in their initial consultation and in the draft rules: they do not believe digital assets such as Bitcoin have value and therefore, they believe they are fundamentally unsuitable for investment."

The FCA's previous efforts were primarily centered around upping the standard of regulatory compliance in crypto to that of the traditional finance sector.

A heavy handed ban appears to be out of character for the agency, which could have opted for more nuanced restrictions to derivatives trading - for example limiting maximum leverage.

"We were extensively involved in the FCA consultation process and had several meetings with the FCA in an attempt to dissuade them from banning ETNs. As a result, we could see first hand the FCA's disapproval of the digital asset class. So, to that extent, we knew there was a meaningful probability that the FCA would enact the ban as proposed."