Is the rise of derivatives trading a risk to retail crypto investors?
With the rise of derivatives trading, how do protocols ensure that retail investors are not going in blind? BTCWith an increase in the number of retail investors dabbling in derivatives trading and investors hopping into decentralized exchanges (DEXs) due to regulations in the United States and China, there has been a rise in users utilizing derivatives DEXs, with Bitcoin (BTC) whales moving into derivatives and an increase in buying interest in derivative contracts.This has created a surge in the daily trading volume for derivatives protocols, allowing them to briefly take over....
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U.K.’s FCA banning retail investors from engaging with crypto derivatives takes away risk hedging opportunities. It has stated a variety of reasons for why the products cannot be “reliably valued” by retail consumers, such as financial crime, volatility and an inadequate understanding of crypto assets being the main ones. It was estimated that retail investors will save $53 million due to this ban. This is despite the FCA releasing a research stating that U.K. consumers have invested an estimated $2.6 million in crypto assets.Although the main intention of this ban is to protect retail....
The ban placed by financial regulators in the United Kingdom on the sale of crypto derivatives to retail traders is now in force. On Wednesday, the decision by the United Kingdom's Financial Conduct Authority to ban crypto futures and exchange-traded notes finally went into effect.The FCA initially announced the ban back in October 2020 following a year-long consideration of the matter. At the time, the FCA argued that crypto derivatives were ill-suited to retail investors who were at risk of incurring significant losses.Commenting on the decision as the ban went into effect on Wednesday,....
America’s largest crypto exchange announced it has acquired derivatives exchange FairX and plans to begin offering derivatives trading to US customers in the future. Major U.S. crypto exchange Coinbase, the third largest in the world by 24 hour volume, intends to enter the derivatives trading markets, having acquired the FairX derivatives exchange.FairX is a Designated Contract Market (DCM) derivatives exchange regulated by the Commodity Futures Trading Commission (CFTC). Despite being relatively new to the market, having launched in May 2021, FairX has secured brokerage partnerships with....
The U.K.’s Financial Conduct Authority (FCA) has banned the sale of cryptocurrency derivatives products to retail investors in a move that it says will save the targeted customers £53 million ($68.9 million) in losses each year. The ban comes into effect on January 6, 2021. In a statement on October 6, the regulator declared that the sale, marketing, and distribution of any derivatives including contracts for difference, options, futures, and exchange-traded notes (ETNs) by any local or foreign company operating in the U.K. is banned. The Authority said derivatives based on....
Retail and institutional investors love derivatives instruments. Here‘s how they could impact crypto markets in 2022. We‘ve all heard stories of billion-dollar future contracts liquidations being the cause of 25% intraday price crashes in Bitcoin (BTC) and Ether (ETH) but the truth is, the industry has been plagued by 100x leverage instruments since BitMEX launched its perpetual futures contract in May 2016.The derivatives industry goes far beyond these retail-driven instruments, as institutional clients, mutual funds, market makers and professional traders can benefit from using the....