UK Finance Watchdog Issues Warning on Crypto Derivatives

The Financial Conduct Authority has warned that firms offering services around crypto derivatives and ICOs "likely" need to be authorized.

Apr 6, 2018 at 1:10 p.m. UTC
Updated Sep 13, 2021 at 7:47 a.m. UTC

The U.K.'s financial watchdog has warned that companies offering services around cryptocurrency derivatives "likely" need to be authorized by the agency.

In a statement posted to its website Friday, the Financial Conduct Authority (FCA), said that although it doesn't consider cryptocurrencies to be currencies or commodities for regulatory purposes, cryptocurrency derivatives may be financial instruments under current directives.

The statement said:

"Firms conducting regulated activities in cryptocurrency derivatives must, therefore, comply with all applicable rules in the FCA’s Handbook and any relevant provisions in directly applicable European Union regulations."

The FCA continued to explain that it's "likely" that companies seeking to offer derivatives linked to cryptocurrencies or tokens issued through ICOs will need to obtain authorization. The products mentioned include cryptocurrency futures, cryptocurrency contracts for differences (CFDs) and cryptocurrency options.

The agency added, however, that an ICO "may or may not fall within the FCA’s regulatory purview depending on the nature of the tokens issued."

The FCA finished with a warning that states: “If your firm is not authorized by the FCA and is offering products or services requiring authorization it is a criminal offence. Authorized firms offering these products without the appropriate permission may be subject to enforcement action.”

While the FCA has been generally positive on blockchain technology, saying in 2016 that it does not plan to regulate the blockchain industry for now as it believes it needs "space" to grow, it has taken a sterner stance on cryptocurrency and ICOs.

In December 2017, the head of the authority, Andrew Bailey, warned bitcoin investors to be prepared to "lose all your money," adding the risks are similar to gambling.

The same month, the FCA announced that it would gather evidence and conduct a deeper examination on ICOs. In a feedback statement, the regulator said it would carry out an analysis on the applicability of U.K. laws to the ICO funding model and assess if there is need for "further regulatory action."

City of London image via Shutterstock

The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
Las criptomonedas deberían cumplir con las mismas normas que las finanzas regulares, dice el G7

Los ministros de Economía y Finanzas quieren que la estabilidad financiera y los estándares de lavado de dinero entren en vigencia pronto, considerando la reciente agitación del mercado.

Los ministros de Economía y Finanzas quieren que la estabilidad financiera y los estándares de lavado de dinero entren en vigencia pronto, considerando la reciente agitación del mercado.

CoinDesk - Unknown
2
CoinDesk - Unknown
First a Hum and Then a Bang –Niagara Falls Residents Forced to Reckon With Crypto Mining

The city in New York has imposed a moratorium on new bitcoin mining operations as complaints about noise were compounded by an explosion and fire at a mining site last week.

The city in New York has imposed a moratorium on new bitcoin mining operations as complaints about noise were compounded by an explosion and fire at a mining site last week.

CoinDesk - Unknown
3
CoinDesk - Unknown
No es solo LUNA: las aplicaciones DeFi de Terra han perdido $28.000 millones

Los inversores han abandonado en gran medida el ecosistema Terra, ahora evidente en los protocolos DeFi en la blockchain, y los analistas siguen siendo escépticos sobre sus perspectivas a largo plazo.

Los inversores han abandonado en gran medida el ecosistema Terra, ahora evidente en los protocolos DeFi en la blockchain, y los analistas siguen siendo escépticos sobre sus perspectivas a largo plazo.

CoinDesk - Unknown
4
CoinDesk - Unknown
Crypto News Roundup for May 20, 2022

With bitcoin avoiding a steeper tumble and a look at what’s behind the biggest stablecoin of them all, CoinDesk’s "Markets Daily" is back with its latest news roundup.

With bitcoin avoiding a steeper tumble and a look at what’s behind the biggest stablecoin of them all, CoinDesk’s "Markets Daily" is back with its latest news roundup.

CoinDesk - Unknown