The sale and promotion of derivatives of bitcoin and other cryptocurrencies to amateur investors is being banned in the UK by the financial regulator, the Financial Conduct Authority (FCA). It’s yet another blow to the burgeoning cryptocurrency market, days after US authorities accused the owners of BitMex, the leading crypto derivatives exchange, for operating without being registered in the US and allegedly not following through. the rules against money laundering.
In view of recent findings from the University of Cambridge that most companies involved in crypto investments still operate without a license, other operators are also potentially vulnerable to allegations.
It all sounds like bad news for anyone who wants more investors to put money into cryptocurrencies. But on closer inspection, I’m not so sure.
Drops and oceans?
The FCA is preventing retail investors from buying and selling options like cryptocurrency futures and options, which people often use as a way to hedge their bets on an underlying asset. For example, you can buy an option to sell a certain amount of Bitcoins at the current price if the price falls by 10%, which gives you an insurance policy in case the market moves against you.
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