Retail investors should not be allowed to trade crypto derivatives, according to a Dutch financial official.
Retail investors should not be allowed to trade crypto derivatives
In a speech at the Amsterdam Propriety Traders Managers Meeting, Paul-Willem van Gerwen, an executive at The Netherlands Authority for the Financial Markets, discussed crypto derivatives.
Market manipulation, illegal financial activity, and a lack of transparency are among the grounds for the proposed prohibition, according to him.
Crypto derivatives, according to Van Gerwen, are popular products with risks, including lack of transparency, market manipulation, and “other forms of criminal activity.”
He also claims that there is a disconnect between the popularity of derivatives and the market’s maturity.
“In general the crypto derivatives market hasn’t yet reached the same level of maturity as the other derivatives markets. And although, as you put it, the markets are exciting and fast-growing, they’re also highly volatile and fraught with risk.
“After all, in the case of price changes – which can be extreme when it comes to cryptos – the question is whether the parties to the derivative transaction will be in a position to fulfill their promises, as we saw recently,” he said.
As a result, he wants crypto derivatives to be limited to wholesale dealings only. He cites the FCA in the United Kingdom, which prohibits them. Furthermore, van Gerwen addressed the influence of blockchain technology on clearing, stating that he does not believe it would be as beneficial as claimed.
Crypto derivatives are extremely popular in the market, despite the fact that they are high-risk investments that can result in significant losses. Goldman Sachs executed its first OTC crypto deal in the derivatives market in March, demonstrating the industry’s growing popularity.
Some have said that the market is misunderstood, such as FTX CEO Sam Bankman-Fried. They offer liquidity and improve market efficiency, according to the premise.
Several more exchanges are preparing to enter the market. Coinbase has applied to trade futures and derivatives, and FTX US expects to do so this year.
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