FCA Bans Cryptoasset Derivative Sales To Consumers

Published / Last Updated on 06/10/2020

The sale of cryptoasset derivatives has today been banned to retail consumers by the Financial Conduct Authority (FCA).

Derivatives are not directly held stocks, shares or bitcoins, they are actually types of 'futures' and 'options' to buy or sell stocks, shares or cryptocurrencies at a given time or price.

The FCA suggests the sale of derivatives and exchange traded notes (ETNs) in the crypto asset area are ill-suited due to the risk of harm they pose and thet facts that these types of products cannot be reliably valued by retail consumers because of the:

  • extreme volatility in crypto asset price movements
  • inadequate understanding of cryptoassets by retail consumers
  • lack of legitimate investment need for retail consumers to invest in these products  
  • 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)

Investing in these products mean retail consumers may suffer harm from sudden and unexpected losses.

Firms carrying out particular types of regulated activity in relation to these investments must be authorised by the FCA, as unregulated transferable cryptoassets are tokens that are not ‘specified investments’ or e-money, and can be traded, which includes well-known tokens such as Bitcoin, Ether or Ripple. Specified investments are types of investment which are specified in legislation.

In order to address the risk of harm, the FCA has made rules banning the sale, marketing and distribution to all retail consumers of any derivatives (i.e. contract for difference – CFDs, options and futures) and ETNs that reference unregulated transferable cryptoassets by firms acting in, or from, the UK.

Banning these products can save retail consumers an estimated £53 million.

UK consumers should continue to be aware of crypto-derivative investment scams and any firm offering the sale of derivatives and ETNs that reference certain types of cryptoassets to retail consumers is now and is likely be a scam.

The ban comes into force on 6th January 2021.


Indeed, as professional financial advisers, we too have privately invested on and 'played' with these trading platforms and even with some knowledge, whilst we did make some money, it still became 'ill informed' gambling.

Explore our Site

Money MOT
T and C