The World Federation of Exchanges Suggests FCA Not to Prohibit the Sale of Crypto Derivatives to Retail Investors

The highly-reputed global organization, the World Federation of Exchanges, has urged the Financial Conduct Authority (FCA) not to enforce a ban on the sale of crypto derivatives to retail consumers. Though, WFE has shown strong support to the regulatory authority FCA’s aim to safeguard the rights of the customers.

Recently, after understanding the complexities of this dynamic arena for the customers, the FCA resorted out to consultation with the industry rulers to draft out the measures to better protect the vulnerable consumers. These customers are likely to get induced in buying crypto-based futures, options, and contracts for the difference profit and exchange-traded notes. As a suggestion, WFE showed its desire to come out with a solution that encourages the trading of innovative products in the UK, which will be sold under the supervision of regulated providers. In its consultancy report, WFE shared that it duly recognizes the need to put the safety of consumers in the first place for any new and untested project in the market.

WFE stated that a complete ban as per the current proposals is likely to affect the operations of regulated exchanges and CCPs, who are currently working under strict regulations to foster safe and efficient markets.

The recommendations made by the WFE are as follows:

• Proper consideration should be given by the regulators to the market structures, as this will ensure a healthy and risk-free ecosystem for the retail investors involved in these markets.
• Applying these measures to exchange-traded and centrally-cleared derivatives is likely to create unintended consequences.
• The measures to reduce the risk exposure for retail consumers should go in alignment with the potential introduction of ‘standards’ for these products.
• There needs to be scrutiny on the ban as and when the market evolves in the path of the betterment of the consumers. The review is created to stop international fragmentation essentially if international standard setters come up with a new global regulatory solution for the crypto assets

The reputed CEO, Nandini Sukumar, quoted:

“Consumer protection must be foremost when seeking to regulate new and innovative products. While crypto asset products have real potential, the market has suffered from unregulated providers distributing inappropriate products. Market infrastructures that adhere to strict regulatory requirements, embed consumer protection as part of their mandate and understand that integrity is fundamental to well-functioning markets are best placed to deliver these products and support the developing marketplace. We ask that authorities, including the FCA, chart the right regulatory course to allow the market to flourish and benefit its consumers even as we understand that it’s a balancing act.”