UK regulator planning to ban crypto CFDs

FCA ban

According to a recent announcement from the Financial Conduct Authority, the UK regulator may be in the process of placing a permanent ban on Bitcoin futures and Contracts for Difference on cryptocurrencies.

The United Kingdom has already implemented a regulation that would place CFDs under a whole slew of restrictions. Two of which are the most important. There will be serious restrictions on promoting and selling CFD related products, and the trading of which will have a leverage cap of 30:1.

The FCA mentioned cryptocurrency CFDs specifically though. CFDs on stocks and commodities will remain unchanged, but crypto CFDs may receive a permanent ban due to market volatility and already existing risks associated with Contracts for Difference.

The regulator said that by placing the ban, they would be saving around $500 million in investor funds every year.

When it comes to market movements, crypto investors should be rejoicing about the news. Fewer crypto CFD brokerages in the UK means fewer UK investors taking funds out of the crypto market.

By removing crypto CFDs, the FCA is inadvertently funneling all the CFD investors towards the crypto market, and exchanges that offer at least some kind of leverage.

By receiving such a large influx of traders all of a sudden, the market is sure to boom one way or another.

However, the talks have not finished yet and the regulator is still in the process of deciding whether or not this is actually a good idea.