UK regulators are at odds over a possible ban

policy makers in United kingdom It is currently divided over regulating the marketing and distribution of derivatives and exchange-traded securities (ETNs) linked to cryptocurrencies. On the 6th of October 2020, the UK’s main regulator, the Financial Conduct Authority (FCA), announced a blanket ban on cryptocurrency-related offers.

The decision was revealed despite the fact that 97% of respondents in the FCA advisory opposed the ban as “disproportionate”. The ban came into effect on January 6, 2021.

Criticism mounts against the FCA’s sweeping ban

The ban has been criticized by industry players who argue that retail investors can assess the risks and value of cryptocurrency derivatives. The imposition of the ban triggered a review of the decision by RPC.

On January 23, 2023, the RPC, a public advisory body sponsored by the government’s Department for Business, Energy and Industrial Strategy, laid out its case against the FCA. the ban.

Using a cost-benefit analysis, the Regional Planning Center estimated annual losses from this measure to be around £268.5 million (about $333 million). The RPC also maintains that the FCA has not provided a clear explanation of what would happen in the absence of a ban, nor has it presented the methodology or calculations used to estimate the costs and benefits of a ban.

Based on this assessment, RPC has rated the ban at “Red Level”, which means it is not fit for purpose.

Regulators struggle to find adequate oversight

A negative public view of the RPC will not necessarily lead to a direct reversal of the legislation. However, it highlights the difference in understanding of what constitutes reasonable regulation by the Financial Conduct Authority (FCA).

The government is promoting the development of the digital industry. However, the controversy surrounding the ban on derivatives and ETNs linked to cryptocurrencies illustrates the lack of unity among regulators on the appropriate level of oversight required for the rapidly evolving industry.

The outcome of this debate will have a significant impact on the availability and accessibility of crypto derivatives and ETNs for UK retail investors.

The discussions provide insight into the ongoing conversations among regulators about the appropriate level of oversight of the cryptocurrency industry and how best to balance protecting consumers with promoting innovation.

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