It’s been long that cryptocurrency is showing potential to replace the traditional financial system. And along with that rising investment on crypto coins has boosted its popularity. These reasons are enough to clearly indicate disappointment of big banks of UK.
But this year there have been positive actions from different regulatory bodies and England’s Financial Conduct Authority (FCA) has also welcomed this new member in the financial sphere.
In March, FCA had announced of joining hand with Bank of England to launch cryptocurrency task force to support and regulate crypto technologies.
With that saying, last month FCA launched global regulatory fintech sandbox, which expects to boost and fast-track innovation in fintech development from around the world by easing regulatory process for testing.
The FCA has confirmed to deliver an analytical report on the state of cryptocurrency later this year and has already delivered a guideline document for institutions interested to establish cryptocurrency derivative offerings.
Race to frame Cryptocurrency regulation
Jacob Ghanty, a partner at UK law firm Kemp Little, told that FCA will try its best to frame a comprehensive strategy for cryptocurrency because the world at large is accepting cryptocurrency. And FCA will be compelled to regulate policies with crypto, since EU will initiate its approach resulting UK to locate upcoming crypto firms.
Guidelines to deal crypto derivatives
FCA had understood the rising taste for financial offering like derivatives in UK.
So, it had clearly stated guidelines for firms to be authorized, which are engaged in offering cryptocurrencies or cryptocurrency-related assets.
FCA had released a statement on its website in April, it’s regulatory guidelines are made on derivatives that reference either cryptocurrencies or tokens issued through an initial coin offering (ICO). This includes:
- cryptocurrency futures – a derivative contract in which each party agrees to exchange cryptocurrency at a future date and at a price agreed by both parties
- cryptocurrency contracts for differences (CFDs) – a cash-settled derivative contract in which the parties to the contract seek 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 outset and at its termination
- cryptocurrency options – a contract which grants the beneficiary the right to acquire or dispose of cryptocurrencies