Decision due early next year
The Financial Conduct Authority (FCA), which regulates payment transactions in the UK, may be about to ban crypto derivatives.
According to The Economist, a final decision will be made on whether popular cryptocurrencies, such as Bitcoin and Litecoin, will be subject to a ban, after a consultation period on the topic ended on October 3.
Strict requirements across the world
The UK isn’t the only country to investigate the classification of cryptocurrencies, despite the ￡23bn ($28bn) that the industry has traded so far this year. China was one of the first countries to sanction companies mining Bitcoin, and most trading had stopped by January 2018.
China was one of the first countries to sanction companies mining Bitcoin
Now Hong Kong has suspended access to crypto funds, and the Japanese government is reportedly considering stricter regulations when it comes to registering. Israel has already failed in its bid to classify Bitcoin as gambling.
However, some European communities have embraced the new technology. Cryptocurrencies are welcomed in the town of Zug in Switzerland, some parts of the Isle of Man (the small island has its own coin, Manx Coin), and even as far away as Mexico.
Interestingly the UK tax collection agency Her Majesty’s Revenue and Customs (HMRC) has already classified the trading as legal and not a means of gambling.
Losses are industry-wide
It seems that the UK is considering the ban after an expensive year for British investors of cryptocurrencies.
According to a report published by The Economist, the country’s losses could be reduced by up to ￡234m ($288m) per year if the FCA bans cryptocurrencies, if the market continues to show signs of volatility.
But with critics saying that cryptocurrencies are no more riskier than other derivatives, any ban could mean that consumers were pushed toward unregulated trades.
A full analysis of the consultation period is now taking place. A final decision is due in early 2020 as to whether cryptocurrencies, in general, will be reclassified as gambling.