The City watchdog has dealt a blow to the nascent digital currencies market by banning the sale of complex derivatives, which allow retail investors to speculate on movements in bitcoin and other cryptoassets.

From January 6, firms will be prohibited from offering retail customers contracts-for-difference, spread-bets options, futures and exchange-traded notes that focus on digital currencies.

The Financial Conduct Authority estimated that the move would save small investors £53 million a year. It has imposed the ban amid concerns that punters are suffering high losses.

Shares in the leading London-listed sellers of contracts-for-difference fell in response, even though IG Group and Plus500 generate less than 1 per cent of their revenues from cryptotrading in Britain. IG shares dipped by 30p, or 3.6 per cent, to