FCA cracks down on cryptocurrency derivative trading

The Financial Conduct Authority (FCA) has warned all companies trading cryptocurrency derivatives that they are likely required to be authorised. In early April, the FCA posted a notice on their website, stating that although cryptocurrencies are not considered currency or commodity under regulatory law, cryptocurrency derivatives may be classified as financial instruments. Firms conducting regulated activities in cryptocurrency derivatives must comply with all applicable rules in the FCA’s Handbook and relevant provisions in directly applicable European Union regulations. Cryptocurrency contracts for difference (CFDs), cryptocurrency futures, and cryptocurrency options are highlighted as possible financial instruments under current regulatory requirements. The FCA also stated that the regulatory purview of an initial coin offering (ICO) may or may not depend on the nature of the tokens issued. The FCA warns that it is a criminal offence for firms offering products or services requiring authorisation without FCA authorisation.

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