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Uk Regulator Decision to Ban Crypto Derivatives to Hurt Investors

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Uk’s Ban on Crypto Derivatives to Hurt Investors, Not Protect them

Following the decision of the U.K’s Financial Conduct Authority (FCA) to ban the sale of crypto derivatives and exchange-traded notes (ETNs) to retail investors, financial experts are saying the decision will hurt investors and not protect them.

In a statement issued about a week ago, the FCA had said it considers certain types of crypto assets to be ill-suited for retail consumers due to the fact that they cannot be reliably valued by retail consumers because of the following reasons:

  • Inherent nature of the underlying assets, which means they have no reliable basis for valuation
  • Prevalence of market abuse and financial crime in the secondary market (e.g., cyber theft)
    Extreme volatility in crypto asset price movements
  • Inadequate understanding of crypto assets by retail consumers
  • Lack of legitimate investment needs for retail consumers to invest in these products.

According to the UK regulator, the ban will affect “the sale, marketing and distribution” to retail investors of any derivatives contract or ETNs that linked to “unregulated transferable crypto assets” issued by entities in or outside the U.K.

The regulator further classifies unregulated transferable crypto-assets as “tokens that are not ‘specified investments’ or e-money, and can be traded.” The term incorporates major cryptocurrencies like bitcoin, ether and XRP.

The new ban will be effective from January 6, 2021, according to the statement.

However, experts are now saying the ban will not protect investors but hurt them as they will not be able to take advantage of market opportunities like their global peers.

Nigel Green, chief executive and founder of deVere Group, has this to say, “This move by the FCA underscores the regulator’s rather misguided approach to cryptocurrencies.

“Whilst the FCA is not stopping people buying Bitcoin or other cryptocurrencies directly, it is banning the sale of products based on their prices.

The regulator does express some valid concerns in its new rules, which we welcome and support.

“However, rather than banning, the FCA should be regulating the booming and unstoppable sector.

“This market, thanks to its exponential growth, needs a robust and enforceable regulatory framework. It needs scrutiny.”

The deVere boss added that “The staggering pace of the digitalisation of economies and every aspect of our lives highlights that there will be a growing demand for digital, global, borderless money.

“Already digital currency is almost universally regarded as the future of money – and we need a joined-up approach to tackling those who undermine it.

“In this regard, most major financial institutions globally already have or are preparing to establish crypto desks. It is why more and more retail and institutional investors are piling into the market. And it is why tech giants, like Facebook, amongst others are getting involved.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Cryptocurrency

Bitcoin Hits Record $19,259 a Coin on Tuesday as Demand Jumps Through the Roof

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Demand for the world’s most dominant cryptocurrency, Bitcoin, rose to a record high on Tuesday amid Trump’s renewed attack on China and general global uncertainty.

Bitcoin rose by 5.2 percent to $19,259.64 or N9.471 million per coin as of 2.24 pm Nigerian time on Tuesday.

Ripple rose by 25.05 percent to 0.00003271 BTC or N233.25 per coin, representing over 100 percent increase in the last one week.

Similarly, Bitcoin Cash advanced to fourth place among the most capitalised cryptocurrencies after gaining 16.90 percent in the last 24 hours to 0.00154 BTC or N129,101 per coin with N2.36 trillion market capitalisation and N170.29 billion volume of trade in the last 24 hours.

Demand for cryptocurrencies rose late on Monday after President Trump renewed his trade war with China, in a move that suggested he is out for revenge.

Few reports have said China was supporting the President-elect, Joe Biden, prior to the US presidential election, and as such was using cyberspace to push that agenda like Russia did in 2016.

The surged in global tension despite COVID-19’s three different vaccines led to an increase in demand for cryptocurrencies by institutional investors in the last 24 hours.

Also, demand for crypto assets on both PayPal and CashApp platforms has exceeded the entire supply of newly minted bitcoins, suggesting a serious supply pressure and likely surge in price above the current level in the near-term.

Bitcoin could set a new all-time record high in few days if demand remains high.

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Paypal Bullish on Bitcoin But as a Currency

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bitcoin to Nigerian Naira

Dan Schulman, the Chief Executive Officer, PayPal, said he is positive about bitcoin’s usefulness as a currency and believed that single fact will prevail over the buy and hold ethos.

According to Schulman, there will be more use cases for cryptocurrencies over time. This, he said would boost cryptocurrency acceptability, growth and stability.

He said “I think that there’ll be more and more use cases for cryptocurrencies,” that make bitcoin more widely accepted, more stable and probably “more valuable” over time.

Schulman further explained that at this stage, central bank digital currency is now a global inevitability. As that happens, “you’ll have more and more utility happen with cryptocurrencies,” he said.

“Both may play important roles going forward,” he said.

PayPal got into cryptocurrency space as an exchange two months ago after pulling out of Facebook’s Libra Group following parliament’s rising scrutiny into Facebook businesses.

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Symatri Launches Kala Pro Wallet With Enhanced Cryptocurrency Protection

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Kala Wallet, which is used by over 30,000 people, has today launched its Pro Wallet, which comes with enhanced security features and three levels of theft insurance cover: Bronze, which covers up to $1,000; Silver, up to $10,000; and Gold, up to $100,000.

The new Kala Pro Wallet is protected through a partnership with Coincover, creators of the safety standard for crypto, which provides theft cover underwritten by Lloyd’s of London.

While cryptocurrency continues to grow in popularity, a constant concern for anyone that holds – or is considering holding – crypto is the potential to lose access to their assets, whether through an accidental loss of their keys, or a malicious attack.

With Coincover in place, the Kala Pro Wallet provides peace of mind by offering financial protection should a user’s cryptocurrency be inaccessible or stolen. It also notarizes the insurance policy on the Kala blockchain for further proof of coverage.

Darren Olayan, CEO of Symatri, said, “Our community of 30,000 Kala Wallet users already benefit from Kala blockchain’s inherent value and asset verification capability within the Symatri ecosystem, and with the launch of our Pro Wallet they can access enhanced protection against theft and loss.

“We aim to provide the most versatile, secure and usable cryptocurrency and platforms, and our partnership with Coincover supports this ambition.”

David Janczewski, co-founder and CEO of Coincover, added, “As more people benefit from their crypto assets being protected, the popularity of cryptocurrency will continue to grow, and we’re delighted to help companies like Symatri make cryptocurrency an important and useful part of people’s daily lives.”

Kala Pro Wallet offers coverage at three levels, paid annually: Bronze, up to $1,000 coverage for $45; Silver up to $10,000 for $195; and Gold up to $100,000, for $1,020.

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