11th November 2021 > > Cryptocompare.

tl;dr

Regulated financial products based on cryptos are coming to the UK.

Market Snap

Market Wrap

Another ATH at $68,990 yesterday afternoon swiftly followed by the lowest print since 7th November at $63k if anyone can remember that far back.

With inflation expected to hit 7% in the US by the end of this year due to supply chain constraints, just how sustainable are 10-year rates at 155bps?

Curious Cryptos’ Commentary – CryptoCompare

The UK regulator, Financial Conduct Authority (FCA) has been treading very carefully and very slowly with regards to all things crypto.

Not so long ago, the popular press was full of stories that the FCA had banned Binance from operating in the UK.

This story – repeated across the traditional news outlets – was in fact complete nonsense. Spot trading of cryptos, just like spot trading of currencies, is an unregulated activity in the UK, and many of those commentators should have known that fact.

What the FCA did do is to remind Binance, and others, that they were not authorised to carry on regulated activities i.e. to offer leveraged products such as futures, swaps, and options.

The FCA have also put out several doom-laden press releases (“Cryptos will eat your grandchildren”) simply to protect their own backs as well as – quite rightly – banning such ridiculous adverts such as “If you see bitcoin on a bus, it’s time to buy”.

These factors have all led to a probably well-deserved reputation for the FCA as one of caution towards the nascent crypto industry.

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But times are changing.

CryptoCompare is a digital asset data provider:

https://www.cryptocompare.com/

The FCA has given authorisation to CryptoCompare to operate as a regulated Benchmark Administrator.

What this means in practise is that the company can issue benchmarks for financial instruments, financial contracts, and measurement of fund performance in the crypto space.

In theory, this allows service providers to create regulated financial products tied to the data supplied by CryptoCompare.

At the current time – to the best of my knowledge – no service provider has been given authorisation to create regulated financial products based on cryptos.

It strikes me as odd that the FCA would give authorisation to CryptoCompare if it was not also minded to give authorisation for actual regulated products.

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If I am right, this is huge news for the UK.

Appropriate and targeted financial regulation is an area in which the UK leads the rest of the world by a country mile.

If the same approach is about to be taken with regards to cryptos, the UK will attract a huge amount of inward investment as companies flock here to operate lawfully under a regulatory system designed to foster innovation and development whilst also maintaining consumer protection.

I need hardly remind anyone of the vast amount of tax dollars that will accrue to the UK on the back of such a development.

I would also suggest to Dishi Rishi that to turbocharge the tax dollars coming our way, he might want to reverse the utterly insane decision to raise corporation tax from 19% to 25% (reminder – corporation tax is largely paid by pension funds and employees as the two key stakeholders), but that is a discussion for another day.