England pulling its socks up over illicit trading of cryptocurrency

The Financial Conduct Authority in England has, in a strict announcement warned cryptocurrency firms about the unauthorized trading of cryptocurrencies and its assets while acknowledging the fact that it has jurisdiction over crypto futures, contract for differences, options and Initial Coin Offerings [ICO].

They have issued a statement which mentions that the feedback statement which was given on distributed ledger technology that ‘cryptocurrencies are not currently regulated by the FCA if they are not part of other regulated products or services’.

The statement suggests:

“Cryptocurrency derivatives  are capable of being financial instruments, though we do not consider cryptocurrencies to be currencies or commodities which can be regulated…..firms which conducting regulated activities in cryptocurrency derivatives are to conform to all  rules which  in the FCA’s Handbook….. and any relevant provisions in directly applicable European Union regulations.”

Financial Conduct Authority [FCA] wants to authorize and regulate activities that refer to cryptocurrencies or tokens which are issued through ICOs.

The main aim is to focus on 3 major domains which are:

  1. Cryptocurrency futures – It is a contract where each party agrees to exchange cryptocurrency at a future date and at a price agreed by both parties
  2. Cryptocurrency contracts for differences [CFDs] – It is a cash-settled derivative contract where the parties privy to the contract aims to secure a profit or avoid a loss by agreeing to exchange the difference in price between the value of the cryptocurrency CFD contract at its launch and at its termination
  3. Cryptocurrency options – It is a contract which grants the beneficiary the right to acquire or dispose of cryptocurrencies

They have advised firms which are unsure about their status to seek out recommendations and apply for the same. This news comes after the previous warning from FCA regarding the dangers associated with CFDs.

In a statement, they have said:

” firm is responsible to ensure that they have necssary approval and permission to carry regulated activity. If the firm is not authorised by the FCA and is offering products or services requiring authorisation it will be considered a  criminal offence.”

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