The U.K.’s Financial Conduct Authority (FCA) is considering a ban on some cryptocurrency-based derivatives, a senior executive has said.

Speaking at an event in London covering the regulation of cryptocurrencies, Christopher Woolard, executive board member and director of strategy and competition at the FCA, said that the watchdog has concerns that retail investors are being sold “complex, volatile and often leveraged derivatives products” based on cryptocurrencies with “underlying market integrity issues.”

He added:

“The FCA will … consult on a prohibition of the sale to retail consumers of derivatives referencing certain types of crypto assets (for example, exchange tokens), including contracts-for-difference, options, futures and transferable securities.”

Exchange tokens, he added, are the regulator’s “neutral” way of describing cryptocurrencies, which “utilize a DLT platform and are not issued or backed by a central bank or other central body,” and “do not function as money.”

By the end of the year, the FCA also plans to consult on which crypto assets fall within its existing regulatory remit and those that don’t, said Woolard. Follow up consultation would then look at whether the agency needs a broader remit to “capture crypto assets that have comparable features to specified investments.”

Elsewhere in the speech, the executive director also said the U.K. Treasury will make a “comprehensive” response to the use of crypto assets in financial crimes by meeting and going beyond the requirements of the fifth EU Anti-Money Laundering Directive (5AMLD).

“On this, [the Treasury] will first consult and then legislate on how to transpose 5AMLD and broaden the scope of anti-money laundering and counter-terrorism financing regulation further,” he said.

Woolard concluded by saying, with the FCA’s Cryptoassets Taskforce believing that cryptocurrencies bring new challenges to traditional financial regulation, the Treasury now plans to further study if regulation can “meaningfully and effectively” address the risks they pose and what, if any, solutions might be arrived at.

“[The Treasury] will consult in early 2019 on whether and how exchange tokens, as well as related actors such as exchanges and wallet providers, could be regulated effectively,” he said, adding it will also seek collaborations with international counterparts to address the issue.

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