The Policymakers in the United Kingdom (UK) seem to have divided opinions on banning the sale, marketing, and distribution of crypto derivates or exchange-traded notes. The Regulatory Policy Committee believes that measures adopted by the country in the year 2021 seem unjustified in the present scenario and shall be altered.
In January 2021, the Chief British Regulator of the Financial Conduct Authority (FCA) imposed prohibition. After which the companies are restricted to offer cryptocurrency derivatives products such as options, futures, and exchange-traded notes (ETNs) to their retail customers. Despite 97% of respondents opposing the “disproportionate” prohibition, the blanket was still imposed.
Two years back when this ban was imposed FCA’s consultation argued that retail investors are capable of assessing the risks and valuing crypto derivatives. Recently, as per the reports of CoinTelegraph on January 23, 2023, the Regulatory Policy Committee (RPC) which is an advisory body in the country and is sponsored by the government department of Business, Energy, and Industrial Strategy states its reason to oppose FCA’s prohibition.
By conducting the cost–benefit analysis, RPC evaluated the annual losses that the country encountered as a result of the prohibition decision. Reportedly, it stated that FCA did not state a clear explanation for the prohibition, nor provided estimates, calculations, or methodologies. Thus, RPC believes, the prohibition decision is at the “red” level indicating the unfit decision for the purpose.
Besides, the negative reviews by RPC, last year British Financial Authorities also made a significant effort to foster the growth of the digital industry in the country. Such as, “designated crypto assets” were made part of the list of investment transactions that qualify for the Investment Manager Exemptions.
However, these efforts by the authorities do not necessarily lead to a reversal of legislation but may frame different understandings on reasonable grounds to be considered in the future.