By George Ward
Politicians in charge of important decision-making in the United Kingdom have differing views on whether to ban the exchange, transaction, and distribution of derivatives and ETNs (Exchange Traded Notes) pegged to digital assets.
The reputable financial regulator of over 50,000 financial markets in the United Kingdom – the Financial Conduct Authority (FCA), prohibited the sale of crypto investment products two years ago. Since then, businesses in the United Kingdom can no longer offer crypto derivatives like futures or ETNs to wholesale buyers.
Meanwhile, many UK lawmakers argue that the FCA regulation was unreasonable, especially considering the peculiarity of the nation’s economy today. According to reports, the FCA enforced the ban as over 95% of crypto market players opposed the law’s implementation.
Nevertheless, the FCA still implemented the regulation. Earlier this week, the RPC (Regulatory Policy Committee) highlighted some valid reasons why the prohibition is an unnecessary burden on businesses.
The RPC is the organization in charge of limiting the inconveniences imposed by regulations on businesses in the United Kingdom.
The RPC Disagrees With The FCA
The RPC offered a detailed analysis of the projected losses and benefits of the FCA ban. In its report, the RPC claimed that the prohibition led to about $340 million in annual business losses.
A spokesperson from the RPC stated that the FCA ought to have created and publish a comprehensive explanation of how the economy will be affected if it didn’t impose the ban. The spokesperson added that the FCA needed to explain the strategy adopted to evaluate the cost and benefits of the decision made in January 2021.
Hence, the RPC declared that the prohibition was unwarranted, as it did not serve its intended purpose. However, the condemnation by the RPC does not imply that the prohibition will be reversed immediately.
However, because of the strong working relationship between the RPC and the department of Business Energy and Industrial Strategy, impactful action will likely be taken regarding prohibition in the coming months or years.
In 2022, financial authorities in the United Kingdom made reasonable efforts to encourage the growth and sustainable development of the digital sector.