Trading Bitcoin may soon be classed as gambling
|According to an article by the Economist, the Financial Conduct Authority may be looking into regulating the Bitcoin trading market as gambling.
"Now the Financial Conduct Authority (FCA), a British watchdog, is proposing a blanket ban on selling crypto-derivatives to retail investors. A consultation ended on October 3rd. Its decision is expected in early 2020." (The Economist)
Interestingly, the Economist says that unlike traditional currencies cryptocurrencies are not legally treated as money as they have no store of value. So when trading crypto derivative you cannot claim they are for hedging purposes like you can with FX forwards, futures and options.
It has been said by the FCA these amateurs fail due to the fact that they may not understand financial derivatives. They also estimate that investors/traders in Britain made total losses of £371m on crypto-derivatives from mid-2017 to the end of 2018 and the net profit was around £25.5m but was mostly captured by the largest investors.
So if you trade on exchanges like BitMex and you are based in the UK there could be a law change on the way. The same kind of thing happened with Binary options recently after there were many complaints about losses. The EU authorities banned people from trading Binary option and many firms closed or stopped offering them. This could be something similar or the trading of Bitcoin could be passed over to the gambling commission.
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