The regulator has even suggested the proposal of banning some financial instruments connected with digital assets, stating it believes consumers don’t have enough understanding of the risks involved. The FCA cites extreme market volatility – a problem which has certainly dogged bitcoin in recent months – as being something that could lead investors to “suffer harm from sudden and unexpected losses if they invest in these products”. In the last seven days, BTC has seen huge market movements as it bounced between almost £14,000 and $9,750. It is this level of instability and unpredictability which is causing concern for the FCA. According to Christopher Woolard, the FCA’s executive director of strategy & competition, such dramatic price movements should cause alarm bells to ring for investors.
He said: “As with our work on the wider CFD and binary options markets, we will act when we see poor products being sold to retail consumers.
“These are complex contracts built on top of complex assets.
“Most consumers cannot reliably value derivatives based on unregulated cryptoassets.
“Prices are extremely volatile and, as we have seen globally, financial crime in cryptoasset markets can lead to sudden and unexpected losses.