Trending Bitcoin News and Market Sentiment February 15th, 2020: UK’s Proposed Derivatives Ban Won’t Affect Retail Crypto Traders as More Individuals Realize and Prefer the Benefits of Storing Actual Digital Assets on Personal Wallets



Bitcoin

  • Bitcoin trades at a daily high of USD 10,598 as the weekend starts
  • The proposed crypto derivatives ban in the UK for retail investors won’t have an impact, says crypto derivatives platform eToro, since 90% of retail investors anyway prefer to buy digital assets directly

 

A week of strength in the crypto markets continues to send waves of bullish sentiment into the weekend, whatever may have transpired on the Friday leading up to it. Bitcoin is now trading on a daily high so far of USD 10,598 (CoinDesk) but bulls will be happy to just have made it this far without letting go of too much ground on the retracements.

Pullbacks and retracements are anyway part of the bull run as seen in the past, and it will need a stronger and more sustained dip than we’ve seen in the past few days to change the tune of the bulls for now.

And, with discussions seemingly centering more and more about increasing access to Bitcoin and other digital assets, direct Bitcoin trading bulls aren’t the only people to be unfazed about seemingly bearish trends for the short term.

The United Kingdom, still fresh out of Brexit phase, with its proposed ban on retail investment in crypto derivatives, hasn’t got eToro down at all. One of the largest platforms offering crypto derivatives, the firm’s UK managing director Iqbal Gandham, insists that the ban will have “minimal” impact on eToro’s business.

Gandham told CoinDesk:

“Two years ago people didn’t understand real [assets] and derivatives, they just thought they were buying bitcoin. Now people are more comfortable in owning their own wallets and transferring crypto, they understand that if they can’t transfer it out then it can’t be real.”

It boasts over 10 million users on its platform and since operating for many years, noticed that retail traders actually understand that there is better value in buying actual digital assets that they can store in their own personal wallets. They prefer this as well, in favor of derivatives where they don’t actually own any crypto.

So Gandham says the company shouldn’t worry about the decision last year by the Financial Conduct Authority (FCA) to announce plans to outlaw the “sale, marketing and distribution to all retail consumers” of crypto derivatives as retail investors were “ill-suited” and unable to “reliably assess the value and risks of derivatives or [exchange-traded notes] that reference certain cryptoassets”.

Regulated platforms like Hargreaves Landsdown already prevented retail access to derivatives even though the FCA won’t finalize the decision until later in 2020. eToro itself has been offering CFDs since 2014 and slowly expanded their crypto-based options, but it was only in September 2017 that they allowed users to buy the asset underlying them. The eToro UK managing director said the rule may have been significant then, but today, most retail traders buy actual digital asset anyway:

“Had you asked me this question in 2016/17, I would have said ‘a really, really big impact, we need to change our business.”

A spokesperson told CoinDesk that some 90% of eToro’s retail users purchase the underlying assets like Bitcoin as of January 2020.

Crypto derivatives that are regulated have long been touted as a potential instigator for the next crypto parabolic bull run, since institutional money is typically keen to be exposed to new assets, but without the financial risk of hacks or theft, or even practicalities like getting enough supply from limited liquidity. Derivatives like futures and options are also popular instruments for big money to invest in other assets like gold and other precious metals, so they are also more recognized and familiar to institutional investors.

Nevertheless, last year’s anticipated offerings like Bakkt fell flat upon launch as repeated delays seemed to have cooled off interest. This year, however, Bakkt and others have all experienced increasing interest, prompted by a crypto rally that has yet to die down. BitcoinNews.com has reported on how rising institutional interest in crypto has led to an explosion in the crypto lending sector, surpassing lukewarm growth numbers in traditional lending.

At the same time, Bakkt has eventually been enjoying a new record in volume exchanging hands every month since the last quarter of 2019, as traders finally chime in on Bitcoin interest.

 

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