de | cn | ru

Market News

CySEC sets leverage, volume limits on cyrptocurrencies CFDs, cancels EU passporting rules on those instruments

Oct 13 2017
Jonathan Smith

The Cyprus Securities and Exchange Commission (CySEC), which probably has the largest number of forex and CFD brokers under its regulation in Europe, has set limitations on the trading conditions of CFDs on cryptocurrencies, offered by its charges.


Probably the most significant part of the document dated October 13, concerns the banning of exercising of EU passporting rules when offering CFDs on cryptocurrencies. “CIFs are not permitted to exercise passporting rights afforded by the Law when offering such services in European Union or third countries”, CySEC said. The reason being that the legal status of digital currencies and financial instruments with them is not universal for the entire EU, so the companies should check for each country the egal status of virtual currency activities applicable in the country concerned and whether specific authorisation is required.


This suggests that if trading in cryptocurrencies or products with them is forbidden in a given EU or third country, the broker should not offer those products in it. To our best knowledge, cryptocurrencies are still a grey area and on country has explicitly forbidden trading in them.


Furthermore, the brokers must warn their clients that trading in cryptocurrencies (such as Bitcoin, Ethereum, Litecoin, Ripple, Monero, etc.) and the products with them are not EU regulated and that rading in such products is not covered by MiFID and therefore falls outside the scope of the CIFs’ MiFID regulated activities. Besides, CySEC notes, digital currencies are very risky and the dangers of trading with them should be stipulated in a specific risk warning. Clients should also be made aware that trading in such products does not entitle them to any protection under the Investors Compensation Fund and they have no rights to report to the Cyprus Financial Ombudsman in case of a dispute with the firm.


Also, under the new rules, the brokers must not offer to retail clients a leverage of more than 1:5 on those instruments and the volume of crypto CFDs should not exceed 15% of the total turnover of the broker per quarter.


The brokers offering CFDs on digital currencies should give access to more than one price feed provider (virtual currency exchanges, liquidity providers) and cross-check to ensure the following of best execution principles. Furthermore, the price feed providers must be duly registered and regulated and must undergo a due diligence check by the broker.


The new rules will affect a significant number of the forex and CFD brokers who are offering such instruments. Some of them, like FXTM, HotForex, LiteForex, FxPrimus, Fibo Group and UFX, for example, have a license from CySEC only. Others, like easyMarkets, HYCM, Plus500 and Admiral Markets, have more than one license, but their Cyprus-regulated units would still have to abide by the new rules.


In the recent months, an ever growing number of forex brokers have started offering CFDs on cryptocurrencies for speculative trading, responding to the rising global interest in those tokens. This week, for example, the Bitcoin reached a new all-time all high of $5800.




TAGS: cysec  cryptocurrency  cfd  limit  bitcoin  ethereum 
Broker Country Regulation Platform Min Deposit Review
$50 Review Website
US NFA, CFTC MT4 $250 Review Website
Cyprus, UK, Mauritius CySec, FCA, FSC MT4, MT5, Web $10 Review Website
Australia ASIC MT4, MT5,
$100 Review Website
Cyprus, Australia CySec, ASIC MT4, MT5 $5 Review Website
UK, Australia, South Africa FCA, ASIC, FSCA MT4, Trading
$50 Review Website
UK, Cyprus, UAE, South Africa FCA, CySEC, DFSA, FSB MT4, MT5, FxPro
$100 Review Website
Cyprus CySEC MT4, MT5, Web $1 Review Website
Belize IFSC MT4, MT5 $100 Review Website
Cyprus, UK, South Africa, UAE CySec, FCA, FSCA, DFSA MT4, MT5, Web $5 Review Website
Cyprus, UK CySEC, FCA MT4, MT5 $1 Review Website
UK FCA MT4, Web, MT4
for Mac
$100 Review Website
Australia, UK ASIC, FCA MT4, MT5,
$200 Review Website

More Forex Market News

Australia to cap leverage at 1:20 and ban binary options

Aug 22 2019 12:18:25

  The latest major forex hub which allowed retail clients to use higher leverage, Australia, is about to cap leverage at 1:20, and ban binary options altogether. Read more

New Zealand’s FMA blacklists Profitix and Dang Kang

Aug 21 2019 12:33:57

    Unregulated Forex brokerages Profitix and Dang Kang International Group have been blacklisted by the New Zealand’s Financial Markets Authority (FMA) on Wednesday   The official warning against the first entity – Profitix - reads that individuals from the bro... Read more

Malta restricts CFD sale to retail clients permanently

Aug 20 2019 16:28:19

The Malta Financial Services Authority (MFSA) adopted permanent rules restricting the marketing, distribution or sale of CFDs to retail clients. Read more

$3,5 bln Bitcoin Ponzi scheme Plus Token pressures the markets

Aug 15 2019 17:42:11

The fraudsters behind the China based Ponzi scheme Plus Token are dumping bitcoins worth over 3.5 billion USD on exchanges around the globe, and that is creating a selling pressure on the markets, venture capitalist Dovey Wan warns. Read more

Spain’s CNMV blacklists EurTrades, Trade100, and Key Markets

Aug 14 2019 13:54:57

  The Comision Nacional del Mercado de Valores (CNMV) updated its warning list on Wednesday with several offshore brokers - EurTrades, Trade100, and Key Markets. These entities are not authorized to provide investment services or investment advice in Spain, the CNMV said. Read more

Former binary options broker iTrader to be indicted in Israel

Aug 13 2019 14:07:37

  Israel’s state prosecutor announced that it intends to indict the company behind former binary options broker iTrader, its owner and senior officials, on charges of aggravated fraud and providing investment advice without a license. The company Gal Media Trade Ltd. Read more

CySEC warns of fake recovery agents claiming to be its employees

Aug 12 2019 20:32:52

  The Cyprus Securities and Exchange Commission warned against fraudsters impersonating its officers who are running a recovery room scam. Read more

Aussie crypto scam worth A$2.7 million busted, five arrested

Aug 08 2019 15:46:37

  A criminal group in Gold Coast, Australia were arrested for allegedly scamming over 100 Australians with A$2.7 million in cryptocurrency investment. Read more

EtherDelta investigated for exit scam

Aug 07 2019 12:01:50

  Chinese police are reportedly taking legal action against cryptocurrency exchange EtherDelta in connection with an alleged exit scam.    The news was actually reported in a series of tweets by the ex-owner and founding partner of the exchange Dovey Wan. Read more

BaFin warns against 4xincome, orders it to cease operations

Aug 06 2019 15:44:28

  The German Federal Financial Supervisory Authority (BaFin) blacklisted unregulated forex broker 4xincome and ordered it to cease operation in the country. The regulator said that this broker offers German clients trading in forex and various CFDs thorough its website 4xincome. Read more

de | cn | ru