UK crypto ban: Bybit to shut down operation

Rick Steves

The regulator stated that retail consumers are estimated to save around £53m from the ban on these products.

bitcoin

Bybit has announced it will cease to provide services to customers from the United Kingdom. The trading firm is shutting down its UK operation following the Financial Conduct Authority’s (FCA) ban of crypto derivatives.

“If you are either a U.K. resident or citizen, please close all your positions and withdraw all account balances by 8AM UTC, March 31, 2021. Thereafter, customers located in or are residents of the U.K. will be restricted from accessing or performing any trading activities on Bybit.

“New sign ups using U.K. mobiles number and/or IP addresses will be restricted immediately. We request your immediate cooperation in this matter. We regret this situation, and will seek dialogue with regulators to explore options. We hope to be able to earn the privilege to serve you again in the future.”

The crypto derivatives ban in the UK has been a hard blow for the ecosystem that was establishing itself in the jurisdiction. Many big names within the industry were already offering their clients access to crypto trading.

IG Group was one of them. Following the ban on the sale of derivatives and exchange-traded notes (ETNs) that reference cryptoassets to retail consumers, the trading company announced it will end its crypto offering by March 24, 2021.

The retail FX and CFD broker has restricted UK retail clients from increasing their exposure to cryptocurrencies since 6 January. The trading platform will also increase margin requirements for existing positions on Bitcoin, Bitcoin Cash, Crypto 10 Index, EOS, Ether, Litecoin, NEO, and Stellar.

The announcement was made to the IG community platform by administrator CharlotteIG, who will take note of all feedback regarding cryptos and will pass it on to senior management.

“Please ensure that you close all your open spread bet and/or CFD positions on cryptocurrencies by no later than 3pm on Wednesday 24 March 2021, from which point we will start to close any positions still open based on our prevailing bid/ask prices. This action is taken in accordance with Term 28(3) of the latest version of the applicable customer agreement governing your account(s) with IG”, said the announcement.

UK ban on crypto derivatives and ETNs due on 25 March 2021

The ban announcement was issued on 6 October 2020 and retail brokers started to enforce the new restriction on 6 January 2021. The total ban will take effect on 25 March 2021.

“The FCA considers these products to be ill-suited for retail consumers due to the harm they pose. These products cannot be reliably valued by retail consumers because of the:

inherent nature of the underlying assets, which means they have no reliable basis for valuation
prevalence of market abuse and financial crime in the secondary market (eg cyber theft)
extreme volatility in cryptoasset price movements
inadequate understanding of cryptoassets by retail consumers
lack of legitimate investment need for retail consumers to invest in these products
These features mean retail consumers might suffer harm from sudden and unexpected losses if they invest in these products.”

The regulator stated that retail consumers are estimated to save around £53m from the ban on these products.

On 6 October 2020, Bitcoin was priced just over $10,000. On 6 January 2021, Bitcoin was on its way to $40,000, and it is now above the $50,000 milestone.

FCA opened 52 investigations into crypto firms

The FCA has recently announced it is going after crypto firms with 52 new investigations being launched. The disclosure comes after bitcoin and other cryptocurrencies won endorsements from well-known business figures including Elon Musk.

In the year to June 30, the Financial Conduct Authority opened 52 investigations into these businesses, according to research by law firm RPC, however, it is thought this could be just the tip of the iceberg, as the regulator is unlikely to be able to handle more than 60 such cases a year, partner Sam Tate said.

 

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