FCA gave directions for dealing in Crypto Derivatives
Apr 08, 2018 Posted / 1167 Views
Financial Conduct Authority (FCA), the UK’s Financial regulator has issued a statement that requires businesses to request sanction for dealing in cryptocurrency derivatives.
It resolves that buying and selling, transacting and advising on cryptocurrency derivatives are amongst such acts that fall under the purview of “Markets in Financial Instruments Directive II (MiFID 2),”.
The FCA particularizes that even though cryptocurrencies are not termed as currencies or commodities which compel regulation, however, derivatives meaning thereby cryptocurrencies or ICO tokens can be referred to as “financial instruments,” therefore fall needs a regulatory regime.
The FCA emphasis on three examples of crypto derivatives: futures, contracts for differences, and options.
Contracts for differences (CFDs) based on crypto-assets track the price of the underlying asset and allow investors to borrow money for their bets to chase high leverage returns. FCA highlighted the high price volatility of cryptocurrencies as its primary concern.
Another European regulator, the AMF (Autorité des marchés financiers),l, in the same manner, desired to clarify the definition of derivatives after online crypto trading platforms began offering binary options, CFDs, and Forex contracts.
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