FCA Proposes Ban of Crypto ETNs as Pound Falls

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FCA UK

The British Financial Conducts Authority (FCA) has opened consultation on a proposed ban of all crypto derivatives and ETNs by firms acting in, or from, the UK.

“As with our work on the wider CFD and binary options markets, we will act when we see poor products being sold to retail consumers. These are complex contracts built on top of complex assets,” Christopher Woolard, Executive Director at FCA, said.

FCA announced this Monday they would limit CFDs to a leverage between 30:1 and 2:1 with further restrictions added for what they call retail consumers, but not an outright ban.

While for cryptos they’re going so far as to propose restrictions on Exchange Traded Notes (ETNs) which is a stock exchange traded product given approval by a regulator to effectively offer crypto backed debt promissory stock notes.

There are crypto ETNs on Stockholm’s stock exchange and there’s a crypto Exchange Traded Product (ETP) on SIX Swiss Exchange, but we’re not aware of any crypto ETNs offered by a UK company.

They give a number of reasons for this proposal, including “inadequate understanding by retail consumers of cryptoassets and the lack of a clear investment need for investment products referencing them.”

One need for such products may well be as a hedge especially considering pound has now fallen below $1.26.

No Deal Risks Increase

Conservative party members are to receive their ballots this Friday with 70%-80% of them returned within three days.

At that point it may be clear who won, so presumably the other one will stand down. Meaning Britain might have a new Prime Minister as early as next week.

All bets are on Boris Johnson who has stated UK is to leave on October 31st “do or die.”

Meaning the prospects of a no deal exit are now very real, but with no change in the parliamentary composition, what is far more likely is a no confidence vote or defections forcing the collapse of the government perhaps as soon as Johnson comes back from Brussels depending on what he comes back with.

Pound continues fall, July 2019
Pound continues fall, July 2019

Pound has continued its fall against the dollar, dropping now to $1.257, as markets keep pricing in Brexit.

The main unknown is what would happen at a general election which would probably be a sort of proxy referendum.

Boris Johnson is popular, but if no deal is on offer, then all bets are off on how a general election would go.

This is at a time when Europe is trying to move full speed ahead on integration, with the only question there seemingly being whether they should close the Balkans gap at the same time, or merge first.

LibDems are riding high as the only option for those that want to stay part of the European Union which is around 50% of the country and perhaps now more.

With Boris at the helm, Farage would be out of the picture. The risk here thus might be a split of the left vote between Corbyn and Libdems.

Yet the greater risk may well be the decimation of the labour party completely as politics aligns in two camps: Boris no deal exit or Libdem European.

Left or right would be far less relevant than the constitutional question of the European Union with many conservatives likely to defect while Labour might not even be able to survive.

Whether Boris has made those calculations is not very clear, nor is it clear just what he wants from Europe beyond a time limit to the backstop. Does he want UK to be part of Erasmus, for example?

All this is to become clearer in the next few weeks, but for now it looks like no deal might happen, perhaps by accident.

That might provoke a flight of capital, a constitutional crisis, a crashing pound, and perhaps a roaring bitcoin.

Hence the need for it for retail consumers as they belligerently call them. We’d call them highly educated Brits who prefer maintaining their wealth rather than see it devalued by donkeys.

Copyrights Trustnodes.com

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