A crypto derivatives ban is a regulatory prohibition or severe restriction on trading financial products based on cryptocurrency values. This action prevents or limits the use of instruments such as futures, options, and perpetual swaps that derive their worth from underlying digital assets. Governments typically impose such bans to mitigate risks associated with extreme market volatility, safeguard retail investors, and address concerns regarding market integrity and potential manipulation. Such prohibitions can substantially alter market liquidity and access for participants within the digital asset ecosystem.
Context
The global regulatory landscape features ongoing debates regarding the implementation and scope of crypto derivatives bans, with jurisdictions adopting varied stances based on their risk assessments. Some authorities maintain strict prohibitions, citing investor protection, while others explore regulated frameworks for these products. A critical future development involves whether broader international consensus emerges on managing the risks associated with crypto derivatives, potentially leading to harmonized or divergent regulatory approaches.
The FCA's policy reversal, coupled with HMRC's tax allowance, structurally integrates regulated crypto-backed products into UK retail wealth frameworks.
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