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The UK is considering a ban on cryptocurrency [CFD]
The British government is considering a total ban on trade in CFD instruments and cryptocurrency-based options. Among other things, according to the FCA regulator, such an action is to increase the protection of individual investors' interests. Is this the beginning of the end of digital currency trading with Forex brokers?
Ban on trading in cryptocurrencies?
A task force that has been researching virtual asset trading since March this year, creates the Financial Conduct Authority, the Bank of England and employees of the British Ministry of Treasury. The purpose of its creation was to examine the advantages and disadvantages of blockchain technology, which is largely connected with cryptocurrencies, as well as to develop ideas for the United Kingdom to maintain its position as one of the major global financial centers.
The report published by the Group under the name Cryptoassets Taskforce reveals the details of the planned changes. In the 50-page document you will find, among others the idea of a total ban on offering the above-mentioned instruments to clients defined as retail. The report's authors cite the specificity of cryptocurrencies, which are characterized by high volatility, the possibility of losses exceeding the value of the deposit or insufficient level of regulation.
The report reads:
"The risk of trade losses can be increased by product charges, such as financing costs and spreads, as well as the lack of transparency in the price formation of cryptocurrency assets."
At the moment, it is only an idea that will be the subject of public consultations, among others with industry representatives and investors. The possibility of exempting from the ban cryptocurrencies that meet the criteria of "securities" is also being considered.
This, however, would not release them from the constraints imposed by ESMA regarding maximum leverage (for cryptocurrencies it is 1: 2), at least until the expiration of the European passport of the United Kingdom (Brexit).
Decision in 2019
The final shape of the changes that will surely take place will be published at the beginning of next year. This type of traffic from the British government may be particularly worried by such brokers as IG Group, Plus500, CMC Markets and LMAX Exchange. LMAX is particularly likely to suffer from the fact that over the past year it has focused strongly on increasing and selling liquidity within CFD trading based on cryptocurrencies.
