There is a lack of consensus among public policy decision makers in the UK on whether or not retail investors should be prohibited from buying, promoting or distributing derivatives and exchange traded notes (ETNs) that are linked to cryptocurrencies.

The Regulatory Policy Committee considers that the measure, which was implemented in 2021, cannot be justified given the current situation. In January 2021, the Financial Conduct Authority (FCA), which is the UK’s main regulator, enforced the restriction.

Since then, companies cannot sell bitcoin derivative products to retail customers. These products include futures, options, and exchange-traded notes (also known as ETNs).

Despite the fact that 97% of people who responded to the FCA’s inquiry opposed the “disproportionate” ban, the FCA went ahead and enacted the blanket ban anyway. Many of the respondents argued that retail investors are capable of assessing the risks and value of crypto derivatives.

The Regulatory Policy Committee (RPC), which is a public advisory body sponsored by the UK government’s Department for Business, Energy and Industrial Strategy, presented its arguments against the FCA restriction on January 23rd.

The RPC carried out a cost-benefit analysis and determined that the annual losses caused by the policy were about $333 million (or £268.5 million).

According to the RPC, the FCA did not provide a detailed description of the particular events that may occur if the restriction were not in place.

In addition, it did not provide an explanation of the methodology and calculations used to assess the costs and benefits at that time.

In light of this, the RPC assigns the ban a “red” rating, indicating that it does not perform its intended function.

The unfavorable evaluation provided by the RPC does not automatically result in the immediate repeal of the Law.

Despite this, as the committee has connections to the Department for Business, Energy and Industrial Strategy, it is possible that this signals a difference in understanding of what constitutes fair regulation between the FCA and the government.

UK financial authorities took a number of substantial steps to encourage growth in the digital economy last year. These efforts were documented in a report.

For example, “designated crypto assets” were included in a list of investment transactions that are eligible for the investment manager exemption. This exemption is for investment managers.