Speaking at a conference, Executive Director Christopher Woolard said crypto CFDs pose a threat to retail investors.
Speaking at a conference in London this Tuesday, the Executive Director of Strategy and Competition at the Financial Conduct Authority (FCA) said that the British regulator will consult on a ban on the sale of cryptocurrency contracts-for-difference (CFDs) to retail investors.
Christopher Woolard made the claims as he delivered a keynote speech outlining the conclusions of the FCA’s ‘Cryptoassets Taskforce’ which was set up in March of this year and which recently released a report detailing its findings.
According to Woolard, that task-force has split Cryptocurrencies into three different categories; exchange tokens, security tokens and utility tokens.
Cryptocurrency FCA style
The first of these would be cryptocurrencies such as Bitcoin and Litecoin. Not backed by any central bank and not acting as a security, the FCA says exchange tokens are, as their name implies, simply a means of exchange.
Security tokens, as one can probably infer from the name, are cryptocurrencies that provide a holder with a stake of some sort in a company. Woolard said that they may be considered securities under the Markets in Financial Instruments Directive II (MiFID II).
Finally, utility tokens are defined by the FCA as being a kind of cryptocurrency that can be redeemed for access to a product or service. Woolard noted that these mainly fall outside of the purview of the FCA.
Having made those definitions, Woolard then moved on to discuss the main risks the Cryptoasset Taskforce found in the cryptocurrency marketplace.
The risks
Put simply, he said that consumers face the biggest risks as they deal with scams, complex products and exposure to failing service providers, such as exchanges.
On top of this, he said that opaque practices damage market integrity and that cryptocurrencies have been used for financial crime, notably money laundering and fraud.
After outlining how the FCA looks at cryptocurrencies and the risks they pose, Woolard then went on to discuss how the regulator plans to govern the nascent digital asset market.
Notably, he said that the regulator will consult on perimeter guidance by the end of this year. That means cryptocurrency firms should soon have an idea on what activities are governed by the FCA’s rules and which are not.
Once that consultation is complete, Woolard said, the regulator will look at whether it should extend its reach to encompass the cryptocurrency activities not covered by existing regulation.
More painful for retail brokers were Woolard’s next comments. The executive director said that the FCA is mulling a ban on the sale of cryptocurrency derivatives to retail clients.
“We’re concerned,” he said, “that retail consumers are being sold complex, volatile and often leveraged derivatives products based on exchange tokens with underlying market integrity issues.”
Any ban on CFDs is likely to also include options, futures and transferable securities.
Finally, Woolard said that the FCA plans to “undertake one of the most comprehensive responses globally to the use of cryptoassets for illicit activities.”
According to Woolard, this will be done by expanding existing anti-money laundering regulation put in place by the fifth EU Anti-Money Laundering Directive.
Speaking at a conference in London this Tuesday, the Executive Director of Strategy and Competition at the Financial Conduct Authority (FCA) said that the British regulator will consult on a ban on the sale of cryptocurrency contracts-for-difference (CFDs) to retail investors.
Christopher Woolard made the claims as he delivered a keynote speech outlining the conclusions of the FCA’s ‘Cryptoassets Taskforce’ which was set up in March of this year and which recently released a report detailing its findings.
According to Woolard, that task-force has split Cryptocurrencies into three different categories; exchange tokens, security tokens and utility tokens.
Cryptocurrency FCA style
The first of these would be cryptocurrencies such as Bitcoin and Litecoin. Not backed by any central bank and not acting as a security, the FCA says exchange tokens are, as their name implies, simply a means of exchange.
Security tokens, as one can probably infer from the name, are cryptocurrencies that provide a holder with a stake of some sort in a company. Woolard said that they may be considered securities under the Markets in Financial Instruments Directive II (MiFID II).
Finally, utility tokens are defined by the FCA as being a kind of cryptocurrency that can be redeemed for access to a product or service. Woolard noted that these mainly fall outside of the purview of the FCA.
Having made those definitions, Woolard then moved on to discuss the main risks the Cryptoasset Taskforce found in the cryptocurrency marketplace.
The risks
Put simply, he said that consumers face the biggest risks as they deal with scams, complex products and exposure to failing service providers, such as exchanges.
On top of this, he said that opaque practices damage market integrity and that cryptocurrencies have been used for financial crime, notably money laundering and fraud.
After outlining how the FCA looks at cryptocurrencies and the risks they pose, Woolard then went on to discuss how the regulator plans to govern the nascent digital asset market.
Notably, he said that the regulator will consult on perimeter guidance by the end of this year. That means cryptocurrency firms should soon have an idea on what activities are governed by the FCA’s rules and which are not.
Once that consultation is complete, Woolard said, the regulator will look at whether it should extend its reach to encompass the cryptocurrency activities not covered by existing regulation.
More painful for retail brokers were Woolard’s next comments. The executive director said that the FCA is mulling a ban on the sale of cryptocurrency derivatives to retail clients.
“We’re concerned,” he said, “that retail consumers are being sold complex, volatile and often leveraged derivatives products based on exchange tokens with underlying market integrity issues.”
Any ban on CFDs is likely to also include options, futures and transferable securities.
Finally, Woolard said that the FCA plans to “undertake one of the most comprehensive responses globally to the use of cryptoassets for illicit activities.”
According to Woolard, this will be done by expanding existing anti-money laundering regulation put in place by the fifth EU Anti-Money Laundering Directive.
Binance Trial on Ice in Nigerian Court as Lawyers Demand Missing Documents
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
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#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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