December 16, 2020

Episode 3: The Implications of the FCA Ban on Crypto Derivative Sales in the UK

Episode 3: The Implications of the FCA Ban on Crypto Derivative Sales in the UK

Be sure to listen to Episode 3 of the AvaTrade podcast where Naeem Aslam, AvaTrade’s Chief Market Analyst will look at the key news events that are impacting the financial markets. 

Many traders were shocked to hear that the FCA is banning the sale of crypto derivatives to UK retail customers. The job of the regulator is to protect the traders, and the regulator had felt some pressure to start regulating this wild west for a while. This means brokers like AvaTrade, who are FCA regulated, will have to stop offering these assets for trading.

Luckily there are many other assets to choose from, but how will this ban affect traders? There is still time left until the ban is enforced. Many traders are making the most of the cryptoassets until the ban officially comes in, especially now in the run-up to Christmas when volatility is so high.

A multitude of trader types

There are many different kinds of traders out there; some are conservative, others are considered passive investors, there are volatility traders, scalpers and day traders.

Bitcoin has attracted people who would come in and hold the instrument to hopefully make a tremendous amount of money over a longer term.

Of course where there is huge reward, comes huge risk too. People will now have to adjust their trading habits. Some traders may move to gold for long-term investing. If the market chooses to sell off, then traders may run to gold, which is considered a safe haven asset. Perhaps in a ‘risk on’ scenario bitcoin traders will move to gold?

What is true is that there are plenty of other investments of a similar nature to consider.  Examples might be certain biopharmas which make huge gains over night on news of finding cures for cancer for example, and even EV giants like Tesla which has made over 500% YTD.

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