The Financial Conduct Authority warns people about cryptocurrencies for the very first time
As Bitcoin’s worth continues to go bonkers around $5600, cryptocurrency trade has never attracted more interest from around the world. There are similar renewed claims from conventional economists that bitcoin is just a bubble that is going to burst at one point or another. Well, they have been saying this for several years now and guess what? Bitcoin is performing better than expectations and solidly standing in its ground in face of increasing criticism and scrutiny.
Since the UK authorities predominantly comprise of skeptics, they have issued their first official warning against trading in cryptocurrencies. They had been toying with this idea for quite some time but didn’t want to come out too strongly like other countries like USA, China and South Korea who are now mulling ways to curb the use of cryptocurrencies, exchanges and coin ICOs. In China particular, ICOs were singled out and heavily targeted. UK instead of going after them directly used its Financial Conduct Authority to issue advice regarding ICOs which are mostly risky anyway. This way, the FCA let us know that it is closely monitoring the current situation and that the cryptocurrency phenomenon is not going to run unchecked in the country forever. Now for the first time, the Financial Conduct Authority (FCA) has come forward with a warning.
The warning specifically targets the Contracts for Difference (CFD) approach that is now becoming more and more popular in the crypto’s developers’ community. According to the new approach, a program called CFD can track the worth of the underlying asset and update the user’s leverage power in a purchase. An FCA spokesperson said that growth in CFDs is a point of concern especially when there is an underlying cryptocurrency involved. Due to this underlying value ,the price and the volatility of the asset involve a lot of risk.
Despite the warning, interest in cryptocurrencies is sky high at the moment. While novel concepts like CFDs are still in development, the system seems to have taken it to a fight early on. It usually means that government cannot cope with the outcomes if the CFDs become popular and change the cryptocurrency economics forever. It may involve penetrating the global payment market as well.