The FCA banning the sale of crypto derivatives: more good than harm?
I was rather alarmed a couple of days ago when I say the news about the UK Financial Conduct Authority banning the sale of Crypto Derivatives.
In fairness like many checking their feeds through blurry eyes first thing in the morning most of that alarm came from just zoning in on the key words with my brain making the interpretation 'BIG LEGAL ENTITY BANS CRYPTO'.
It's not great for crypto prices if one of the world's richest countries is going to make it more difficult for people to access crypto after all!
However, on a closer reading a bit of thought it turns out that the news isn't so bad.
For a start the FCA is only banning the sale of crypto derivatives to retail consumers - so products based on the price of BTC or other cryptos - presumably things like 'shares' in crypto packages that you buy in FIAT and you get a proportionate amount back in FIAT IF the crypto rises in price, if it doesn't you get less back.
The idea behind banning the sale of such products is that it makes it too easy for people to just hand over their cash to a third party and then lose money due to the volatility of crypto prices, so the ban is being done in the name of 'consumer protection'.
It's estimated that this will save UK retail consumers around $50 million a year, which presumably is the average amount they would have lost, with that $50 million either going to the company they bought unto or literally being lost with crypto price decreases.
I have to say that in the grand scheme of around 2.5 million people already owning crypto, which must equate to billions being invested by UK consumers alone (albeit MOST of that probably controlled by a few dozen people), $50 million a year doesn't sound like a lot.
That's the equivalent of 100 000 losing $500 in a year, which really doesn't sound like a lot in crypto terms.
HOWEVER, I guess it's better to stop that $50 million being skimmed off by some unscrupulous derivative dealer.
in any case, as far as I'm concerned crypto is all about individual personal responsibility, so if you're going to buy BTC or whatever, damn well learn about it, learn how to use an exchange and damn well just buy it yourself direct, rather than going through a third party in some kind of bizarre derivative package!
I think the FCA may, bizarrely have done crypto a favour here.... I mean if people lose money because they've invested themselves directly, they're hardly going to kick up a fuss and create negative publicity, which would be the case if they've been 'scammed' (which is how it would be reported) by a third party company!
Of course it's still a government agency interfering in Crypto, but let's be realistic it's fairly unlikely that's not going to happen in some shape or form going forwards!
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