The UK FCA prohibits the sale of encryption derivations to retail investors to protect them from potential losses.

UK financial regulators take action to protect retail investors

The UK's Financial Conduct Authority (FCA) recently announced an important decision aimed at protecting retail consumers from potential risks in the cryptocurrency derivatives market. From January 6, 2021, the sale of such products to retail consumers will be prohibited.

Regulators pointed out that the "extreme volatility" of the cryptocurrency market is one of the main reasons for this decision. They believe that ordinary investors find it difficult to accurately assess the risks and values of these complex products. Additionally, the threat of hacking attacks and the lack of reliable valuation bases for cryptocurrencies are also factors that prompted regulators to take action.

The impact of this ban is widespread, involving not only crypto derivatives exchanges but also related industry participants such as crypto brokerages, investment platforms, and investment advisors. The FCA expects that this measure will help retail consumers avoid potential losses of around £53 million.

This move reflects the regulators' ongoing concern about the risks in the cryptocurrency market and their determination to protect the interests of ordinary investors. As the digital asset sector continues to evolve, similar regulatory measures may emerge in other countries and regions to address the challenges posed by this emerging market.