The UK’s financial regulatory body issued a statement on Friday aimed at businesses providing “derivatives” and similar services to the public.
The FCA said that it does not consider cryptocurrencies to be a commodity or traditional currency from a regulatory standpoint as currently no legal framework exists, but they believe some derivatives may be considered to be financial instruments under the current legislation more specifically the Markets in Financial Instruments Directive II (MIFID II) and therefore businesses must seek authorisation or clarification from them as soon as possible.
Any operation, dealing, arranging or advising of derivatives that reference either cryptocurrencies or tokens issued through an initial coin offering (ICO) will require authorisation by the FCA, this also includes options and CFDs.
“It is firms’ responsibility to ensure that they have the appropriate authorisation and permission to carry on regulated activity. If your firm is not authorised by the FCA and is offering products or services requiring authorisation it is a criminal offence. Authorised firms offering these products without the appropriate permission may be subject to enforcement action.” said the FCA
The FCA is carefully monitoring the crypto industry as it grows, they released a statement last December warning that CFDs were extremely high risk and speculative products and that consumers should be fully aware of the price volatility, leverage ratios, higher charges in comparison, funding costs and transparency.