The more rational take is that the FCA is acting to protect UK citizens from potentially dangerous financial products from an unauthorized organisation.
The keyword in your statement is 'unauthorised'.
The FCA rarely acts to protect UK citizens from potentially dangerous financial products from authorised regulations. The last time I'm aware of, to ensure that retail gamblers cannot lose more than they stake in highly leveraged bets, was pushed through by ESMA, not the FCA.
EDIT: added the post I was responding to, to add context.
The job of the FCA, and of regulations in general, is not to shield people from risk and losses, it's to prevent scams and to make sure people are informed of the rules and of the risks.
Basically the law is not there to prevent people from making bad decisions, it's there to ensure that they can make informed decisions.
Same here in Germany. We don't have access to US-style stonk options, to the great frustration of people seeing US redditors making bank with GameStop while all we had was hodl'ing the stock itself.
Could you clarify please? There are a number of brokers that give you access to US option markets in Germany, e.g. all the intermediaries for Interactive Brokers such as Lynx, Banx, etc. Relatively easy to set up, too.
If as the article states the exchange itself is promising certain returns then it doesn’t comply with the law and absolutely is breaking the rules.
Financial products in the UK (and most other markets) can’t advertise any returns that aren’t guaranteed without pretty clear and specifically worded disclaimers.
The FCA isn’t singling anyone out in applying this rule here that I can see.
As per usual, the upshot here is that most crypto holders still think these are all new concepts and don’t realise that the rules are based on hundreds of years of experiences and consequences.
"There's demand for my perpetual motion machine!" is not a good argument.
What they have said is Binance cant offer regulated offerings such as derivatives and options, for which a licence from the FCA is required. Those licenses are given out easily enough to places like plus500 wc. They are essentially gambling, you dont buy securities/assets/stocks/currencies you just bet on price movements of those items.
It sounds like you're defining gambling in terms of tangibility.
Very few people take physical delivery of stock certificates, bond certificates, or currencies. In some sense, their trades are just bets on the value of numbers in a database.
Are silver futures contracts "just a bet on price movements"? What if the contract is physically settled and the buyer takes delivery of the silver bars to their home? Is it still "just a bet"? What if they always sell the contract before delivery? What if instead it's a cash-settled futures contract? It sounds like you don't consider spot fx trading to be gambling. What about FX futures? What about FX CFDs?
What about synthetic financial products with less volatility than some of the more volatile equities. Are those gambling?
Without expressing more detail or nuance, it sounds like you're defining gambling as risks you don't take. There's an argument to be made about exposing retail investors to leverage and high volatility. Though, you don't seem to be making that argument.
The trouble with defining gambling by tangibility is that most of our modern dealings are very abstract, and it basically ends up being what you're used to vs. what feels novel/foreign.
> However, they are still allowed to use the website to purchase and sell crypto-currencies, which is not regulated
Fiat is run by democracies with elections, they're not pay-to-play oligopolies like crypto.
Monetary and fiscal policies can be used to control the health of the economy. It's part of a wide system that also offers education, medical care, transportation, and many other utilities for actual people. Crypto offers what, exactly?
NFTs are worthless garbage nobody can legislate. Digital barcodes. Nation states have robust IP laws to protect and transfer ownership.
Crypto wastes energy. It also wastes human brains that could be solving more pertinent problems.
Gambling on crypto is as dangerous as it gets, and it's best we keep those without money to lose and financial knowledge away from these things. This isn't just a MLM, it's people's lives.
Quantum computing will render all of the blockchain useless anyway.
Crypto is a religion like meme to some and get rich quick scheme for many more.
Crypto isn’t the new fiat, it’s the new gold.
Most of the world does not have a robust nation state ensuring identities and ownership. It’ll be a massive boost to the world economy.
NFTs will enable new interconnected markets that we haven’t even dreamed of yet.
Not all crypto wastes energy, look into Cardano.
Quantum computing will change everything, this isn’t exclusive to blockchains.
There’s far more good that’s going to come out of this than bad with people gambling. The gambling is bringing attention to a major advance for humanity. Any press is good press in this case.
How? My understanding of it is that it's a JSON document that points to a URL (which is just some webserver 99% of the time).
How does this allow anyone to do anything novel that couldn't be done with a centralised database and an API?
This conversation, and entire confusion around the utility of blockchains eerily reminds me of the now infamous challenge to Drew Houston that Dropbox was nothing more than a simple FTP with a share.[0] That's right, but also very wrong, missing the big picture.
You can do that with a central clearing house much easier. In fact, then you'd be covered by US and probably international law against theft.
> This conversation, and entire confusion around the utility of blockchains eerily reminds me of the now infamous challenge to Drew Houston that Dropbox was nothing more than a simple FTP with a share.
You don't know the future, and this is a cop out of an argument.
I'd be willing to bet you $1000 that the crypto market fizzles out in ten years. That it's no bigger than the banks and classic institutions, and that it's no larger than 2x its present market cap on June 28th, 2021. Including any new entrants.
I'd also and separately be willing to bet you $1000 that there's a cryptographic attack (quantum or not) that scares everyone away from crypto. (And I think the US and China already know this.) I'll define "everyone" as a loss of institutional support by at least ten major stakeholders worth over 1B USD. (I think it would be much broader, but I want to define a measurable metric.)
Ten years - want to make that bet?
I mean, I'm a bear on ~everything crypto, but I no longer think it will go away just because it is stupid, useless or wasteful. I don't think it will reshape or replace anything, but I'd almost be shocked if it "fizzled out" in the next ten years.
People are still paying good money for homeopathic remedies; you think they'll wise up about crypto any faster?
The world will never be ready for the scenario that you're predicting in <=10 years. If you truly believe that timeline enough to bet money on it, you damn well should be burying gold, stocking up on canned goods, digging a well, and amassing a stockpile of firearms today. No sarcasm.
There's no need to do this with an HN poster. Crypto is a financial market. There's no end to puts you can buy if that's what you believe. Just buy some puts, and bet on the value of $COIN going down.
So I will take a bet on crypto in 10 years that actually IS in accordance to my actual views. There will still be more than one cryptocurrency in widespread use (endorsed by nation-states or in wider usage) in the world by 2031. I'll call that bet up to $10,000 2021 USD, inflation-adjusted in the year 2031. I've added a way to reach me on my about profile. Reach out and I'll formalize a contract over for you to have notarized and return to me. A cousin of mine is a lawyer so it'll be air tight.
Your second bet is even more vague and useless to haggle over, "scares everyone away", what does that mean, exactly. Too much wiggle room, I don't see a way to nail you down offhand, so I'm not interested in that one.
I wasn't trying to "argue" with the Dropbox reference, I said it simply reminded me of that moment.. as I believe you couldn't be more blatantly and obviously wrong.
Looking forward to taking your money as I have a child on the way that will need it by that point. I'll accept your payment in the cryptocurrency that you'll be using in 2031 as well.
Governments will regulate it. They'll protect banks and financial institutions and jail anyone breaking into them.
They won't give a shit about crypto.
Cryptocurrencies are far more democratic: every time a transaction is submitted the network votes on whether or not it is valid using consensus mechanisms like proof of work or proof of stake.
Fiat currencies are far less democratic: we can only vote for the people that will control them, not for what they will actually do with the currency. In the UK we do not vote for any positions in the Bank of England.
> Monetary and fiscal policies can be used to control the health of the economy. It's part of a wide system that also offers education, medical care, transportation, and many other utilities for actual people. Crypto offers what, exactly?
Monetary and fiscal policies can still operate without control of the currency, see Eurozone members having local policies. All it means is that they can’t arbitrarily print the currency.
> NFTs are worthless garbage nobody can legislate. Digital barcodes. Nation states have robust IP laws to protect and transfer ownership.
You misunderstand NFTs. It is not about intellectual property, it is about property. I can prove I have ownership of any token instantly and trustlessly.
> Crypto wastes energy. It also wastes human brains that could be solving more pertinent problems.
Many cryptocurrencies have negligible energy usage even over the entire network: see Nano. Even in Bitcoin, how is the energy usage a “waste”? It is holding the entire network together.
And with human brains, cryptocurrency research has had very beneficial impact in other fields, see for example Monero’s development of RingCT and Bulletproofs+. And that is ignoring the fact that these brains are reshaping our entire financial infrastructure.
> Quantum computing will render all of the blockchain useless anyway.
Not really. Even if quantum computing was possible now Bitcoin would still be usable. And advancements are being made across all cryptocurrencies to secure them better.
When the votes take money or resources, that's not democratic.
> Fiat currencies are far less democratic: we can only vote for the people that will control them, not for what they will actually do with the currency. In the UK we do not vote for any positions in the Bank of England.
It's still representative democracy. You broadly know what politician's platforms are with respect to taxes, priorities, etc. If they do stuff you don't like, you vote them out.
> Monetary and fiscal policies can still operate without control of the currency, see Eurozone members having local policies. All it means is that they can’t arbitrarily print the currency.
So you lose your largest levers so you can make rich cryptowhales happy. Not good.
> You misunderstand NFTs. It is not about intellectual property, it is about property. I can prove I have ownership of any token instantly and trustlessly.
I don't respect your ownership. Neither does anyone else. When your keys leak - and they will -, you don't own it anymore. I'll much sooner use actual laws with records to buy my next house or car.
> Many cryptocurrencies have negligible energy usage even over the entire network: see Nano.
None of the major cryptocurrencies do despite claiming they would for years. I'm not holding my breath.
> Even in Bitcoin, how is the energy usage a “waste”? It is holding the entire network together.
When it's a network that many of us think is pointless, we're simply scratching our heads at this.
> Monero’s development of RingCT and Bulletproofs+.
More crypto junk and not a cure for cancer.
> And that is ignoring the fact that these brains are reshaping our entire financial infrastructure.
It doesn't need changing! We're increasingly building tools to serve the underbanked, and we need the government to continue with AML, KYC, etc. They serve a very valuable purpose of stopping terrorism, preventing bribery, etc.
> Not really. Even if quantum computing was possible now Bitcoin would still be usable.
If Satoshi's keys, or the Winklevoss keys, or Coinbase keys leak, it's game over forever.
> And advancements are being made across all cryptocurrencies to secure them better.
Better hurry. I don't think you realize the clock is ticking. If quantum beats you, it's game over. The network has no value when the trust and ownership can't be proven. Once crypto can attack keys, parties can't prove they own the address. Even if the network is forked or reverted, it's forever broken.
It is by definition democratic.
> It's still representative democracy
Sure, I wasn’t claiming it isn’t democratic just that it is less democratic.
> If they do stuff you don't like, you vote them out.
Not always, for example the Bank of England’s monetary policy committee is not elected.
> I don't respect your ownership.
Good for you however I don’t actually care whether or not you respect it. For example with concert ticket NFTs the only person that needs to respect it are the organisers, not you.
> When your keys leak - and they will -, you don't own it anymore.
That is intended.
> None of the major cryptocurrencies do despite claiming they would for years.
What do you count as major? Nano is in top 100 by market cap.
> When it's a network that many of us think is pointless, we're simply scratching our heads at this.
I think that retail stock market trading is pointless however I respect its ability to consume energy as part of the free market.
> More crypto junk and not a cure for cancer.
Sounds like you are very prejudiced and have made no effort to research these technologies before calling them junk and wastes of energy.
> It doesn't need changing!
I’m sure nobody thought banking needed changing in the 1900s before it became digitally available. Researching new technology can almost never be bad.
> We're increasingly building tools to serve the underbanked, and we need the government to continue with AML, KYC, etc. They serve a very valuable purpose of stopping terrorism, preventing bribery, etc.
Yes and we still can, and are doing the same with cryptocurrencies.
> If Satoshi's keys, or the Winklevoss keys, or Coinbase keys leak, it's game over forever.
It’s only possible to crack someone’s private key using quantum computing if they have spent from that wallet before (as this is the only time at which an accounts public key becomes public). Most of those accounts you have listed have never spent any of their coins so it would not be possible to crack their accounts.
I disagree that citizens need to be “protected” from speculation. Governments should monitor markets and go after scammers when they act, not shut down the markets entirely.
This is a different stance from the America libertarian view of "everyone is responsible for their own actions" mostly because the balance of power is greatly in favour of the companies.
My assumption is most people do not know what they are doing when it comes to trading equities or derivatives.
There are other solutions to your concerns - namely required training explaining risks, an approval process, and not allowing derivatives to be recommended by platforms. Outright bans come from ulterior motives or incompetence.
My stance is not what you have presented. If I had to briefly summarize my stance: let people make reasoned decisions for themselves, and provide safeguards to mitigate the most common accidents.
Say you covert 1000 USD into BTC, and you can convert back without costs. If BTC goes up 100%, you should be able to get back 2000 USD. If BTC goes to 0, you get zero. Leverage is 1 as your return relates 1:1 to the return on BTC.
Now let's look at leverage, say we take a leverage of 100 (not a crazy amount). This means that your return in USD goes 100x the return in BTC, so if BTC goes up 1% you earn 100% (and walk away with 2000 USD). It also means that if BTC goes down 1%, you lose everything.
The other thing is that if you have insufficient margin, the venue close down your position by putting it on the market. If BTC has a short dip and quickly recovers, the venue will have closed down your position at the point where you lost your margin (all your money). This can be exactly the -1%, but depends on the market and the liquidity. If BTC will go up 10% but does so in a noisy way, you might be right but the venue could have closed down your position the moment BTC touched -1% during the random movements.
Eveb worse, say that BTC drops 10% in a very rapid move because of some tough news and panic. The venue puts the orders to sell your position at the -1% mark but because of lack of liquidity these orders get filled at -10% and your loss becomes 10.000 USD. Even if BTC recovers quickly, you keep your loss because the position is closed. That is the problem.
So, in a nutshell, with unleveraged investing you can lose everything, but with leveraged investing you can end up in serious debt.
Losses in the Crypto world are limited to the amount of capital you put in a certain position. This has the side effect of (maybe) not collecting the full amount on the up-side. Pretty much all exchanges do this, since it's almost impossible to go after individuals when they go bankrupt.
Now the popular derivatives frameworks have sizable insurance funds for such events; but clawbacks are a thing in the crypto world.
"WARNING: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk"
"Representative Example: £250 loan for 3 months at a fixed interest rate of 290% pa. Total amount payable is £321.51"
Or at https://www.ig.com/uk/spread-betting
"71% of retail investor accounts lose money when trading spread bets and CFDs with this provider."
Or even https://www.vanguardinvestor.co.uk/investing-explained/inves...
"Please remember that the value of investments can go down as well as up and you may get back less than you invest."
It's the opinion of British society that citizens _do_ need to be protected in this way.
I would replace 'protected' with 'warned'. You can still do it but as long as you have been informed correctly beforehand then you are taking a risk with the knowledge it could go tits up.
More like protect their position as regulator. The UK (London) is home to many CFD exchanges which are more scammy (almost 100% scammy) compared to Binance (which is a legitimate exchange that happens to be dangerous to use if you don't know what you are doing).
Exactly, Binance was heavily advertising on London Transport to people who probably don't know what they were doing:
https://news.bitcoin.com/uk-bans-time-to-buy-bitcoin-ads-bus...