Crypto-Derivatives Could Become Illegal in the UK Next Year

Crypto-Derivatives Could Become Illegal in the UK Next Year

                             

Various governments around the world aren’t too sure how to tackle Bitcoin.

Numerous aspects of this particular industry need to be treated very differently from one another. Crypto-derivatives are getting some unfavorable attention in the United Kingdom. So much even that these vehicles may be considered illegal in the near future. 

Crypto-Derivatives are Appealing

Although a lot of people would love to speculate on the Bitcoin price, most of those traders have no intention of physically owning cryptocurrency. New solutions need to be found to cater to these people. The introduction of crypto-derivatives offers a remarkably viable solution. It allows traders to “gamble’ on the Bitcoin price movements without buying cryptocurrency directly. 

Service providers have noted there is a genuine demand for these vehicles. The fluctuations of Bitcoin are notorious. It is this price volatility that makes crypto-derivatives a gambling operation, to some extent. That particular aspect has now drawn a lot of criticism from some UK government officials. They want to see this market be deemed illegal once and for all. That could hinder the growth of cryptocurrency in the UK, although nothing has been decided as of yet. 

The Proposal

One has to keep in mind the crypto-derivatives industry is quite vast. It spans options, futures contracts, and other similarly oriented trading vehicles. As Bitcoin is not officially regulated in the UK at this time, it is only normal investors with an appetite for risk explore these options. That being said, these products do not adhere to strict derivatives guidelines present in this region, which creates a fair bit of friction. 

Under the current proposal, the Financial Conduct Authority seeks to introduce a blanket ban on crypto-derivatives sold to retail investors. This would make any Bitcoin-related trading vehicle – except for BTC itself – illegal in the United Kingdom. A bit of an odd choice as regulating this industry should have more beneficial long-term effects for all parties involved. A blanket ban is never the answer in any financial sector. For now, the proposal has yet to be voted upon. A decision is expected to be made public by Q2 2020 at the latest.

Bitcoin in the UK

It is not easy for cryptocurrencies to gain any form of mainstream traction. That situation is no different in the UK, despite it being a more open-minded region regarding such innovative tools. One does have to wonder if a blanket ban on crypto-derivatives would have real effects on the Bitcoin price. After all, appeasing retail investors has never been a high priority among the Bitcoin faithful. 

Article Produced By
JP Buntinx

JP Buntinx is a FinTech and Bitcoin enthusiast living in Belgium. His passion for finance and technology made him one of the world's leading freelance Bitcoin writers.

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