It looks like Britain is set to fall behind when it comes to holding a strong presence in the crypto space. The country’s top financial watchdog announced yesterday that it would be banning the sale of crypto products to all retailers that work to track the prices of well-known digital assets such as bitcoin and Ethereum. The governing body claims that too many people have lost money on these assets, and thus they are dangerous and should not be in commission.
Britain Seeks to Ban Crypto-Tracking Products
This sets up one heck of a two-sided coin. On the one hand, yes… it’s true that many people have lost money on crypto assets. For the most part, cryptocurrency is still a developing medium of trade. There are plenty of kinks to work out, and many of the assets in question are very vulnerable to volatility and random price swings as we’ve seen with bitcoin on several occasions this year. One minute, it’s trading for $10,000. The next, it’s at $3,800.
However, it’s also safe to say that many of the investors who have gotten involved in crypto were likely aware of the risks. They knew that the status of cryptocurrency had not been fully established yet, and that for the most part, the space was primarily a speculative one that would ultimately rock their world and make them rich overnight or lead them to financial struggle.
This is the case with several types of assets. In many ways, it’s the same scenario with stocks. You can get rich rather quickly with stocks, or you can wind up bankrupt. That’s the game when it comes to investing. You never know which way the assets will turn, and yet the financial watchdog in question – the Financial Conduct Authority (FCA) – isn’t banning the sale of products that track stocks. So, why are cryptocurrencies being singled out to such a degree?
The ban is set to be enforced beginning on January 6, 2021. Many have already taken to social media and other channels to express their anger and disappointment. Legal advisors at Ashurst, for example, explained in a statement:
Many will think it is not necessary. There are already material leverage restrictions related to this form of trading and this appears quite ‘nanny state.’
Many Aren’t Happy About It
Lawrence Wintermeyer – executive co-chair of Global Digital Finance – expressed similar sentiment, mentioning in a recent interview:
This ban kills off what could have been a new investment opportunity for sophisticated retail investors. It also sends a negative signal regarding the UK’s stance on crypto assets.
Upon the announcement of the coming ban, shares in several top companies in Britain – including Plus500 and CMC – fell by anywhere between one and 3.6 percent. The FCA is defending its decision, claiming that the ban will ultimately save retail investors more than 50 million pounds.