Bybit, a cryptocurrency derivatives exchange, announced on Friday it is set to suspend its services to UK customers in order to comply with the Financial Conduct Authority’s (FCA) ban on cryptocurrency derivatives.
Last summer, the FCA published its final rules banning the sale of derivatives and exchange-traded notes (ETNs) that reference certain types of crypto-assets to retail customers. The FCA revealed at the time that it considers the products to be “ill-suited” for retail consumers due to the harm they may pose. The products be reliably valued by retail consumers due to the following:
- 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 crypto asset price movements
- inadequate understanding of crypto assets by retail consumers
- lack of legitimate investment need for retail consumers to invest in these products
The FCA reported estimates that retail consumers will save around £53m from the ban on these products. Sheldon Mills, interim Executive Director of Strategy & Competition at the FCA, stated:
‘This ban reflects how seriously we view the potential harm to retail consumers in these products. Consumer protection is paramount here. Significant price volatility, combined with the inherent difficulties of valuing crypto assets reliably, places retail consumers at a high risk of suffering losses from trading crypto-derivatives. We have evidence of this happening on a significant scale. The ban provides an appropriate level of protection.”
Bybit then shared that customers who either UK residents or citizens must close all their positions and withdraw all account balances by March 31st 8 AM UTC. After that date and time, customers located in or are residents in the UK will be restricted from accessing or performing any trading activities on the Bybit platform. New sign-ups using UK mobile numbers and/o IP addresses will be immediately restricted. The platform added:
“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.”
Launched in 2018, Bybit is a cryptocurrency derivatives platform that supports both inverse and linear perpetual contracts. Registered in the BVI, the platform’s users come from all over the world, ranging from individual retail clients to professional traders.