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
Cyprus, UK, Mauritius CySec, FCA, FSC MT4, MT5, Web $10 Review Website
UK FCA MT4, Web,
$50 Review Website
Australia, Cyprus ASIC, CySEC MT4, MT5, Iress $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 MT5 $5 Review Website
UK FCA MT4, Web, MT4
for Mac
$100 Review Website

More Forex Market News

Crypto scammer Patrick McDonnell sentenced to 33 months of imprisonment

Jan 17 2020 14:54:19

Patrick McDonnell, CEO of Coin Drop Markets, was sentenced to 33 months in federal prison and also ordered to pay $224,350 in restitution, after pleading guilty to cryptocurrency fraud last year. The Federal court in Brooklyn issued the sentence on Thursday. Read more

UK's FCA expects up to 10% decline of profits in the forex industry

Jan 16 2020 17:47:56

The Financial Conduct Authority (FCA) expects that the new regulations imposed on the retail forex and CFD brokers in the UK will lead to an overall reduction of their profits of between 6% and 10% - a decline which by the year 2021 may reach between 38.5 million GBP and 55.3 million GBP. Read more

UK’s FCA updates its warning list with A.B.Capitals and LincolnFX

Jan 16 2020 16:48:27

  Another bunch of brokers have made it to the warning list of UK’s Financial Conduct Authority since the beginning of 2020. We’ll focus on two of them - A.B. Read more

Coinbase will pay $1 mln to victims of the Cryptsy hack attack

Jan 15 2020 18:06:18

Coinbase, the San Francisco based crypto exchange, has agreed to pay 962500 USD as a compensation  to victims of the Cryptsy hacker attack, in an out of court settlement, court papers reveal. Read more

Clients of FXFINPRO to be invited to file compensation claims

Jan 15 2020 14:32:03

  Clients of now-defunct forex brokerage FXFINPRO will be invited to submit compensation applications by the Investor Compensation Fund (ICF), the Cyprus Securities Exchange Commission (CySEC) announced on Monday. Read more

Australians were scammed for $42.5 mln in 2019 alone

Jan 14 2020 14:08:08

Australians have lost some 61.61 mln AUD (42.5 mln USD) in investment scams in 2019 alone, the latest data of the Australian Competition and Consumer Commission (ACCC) reveals. Read more

Chinese investors lost an average of $20k to crypto scams in 2019

Jan 14 2020 13:06:44

  Chinese crypto investors who have been scammed in 2019 reportedly lost nearly $20k each (134,522 yuan), according to the 2019 Cyber Fraud Trend Research Report, published previous week. Read more

Cobinhood suspends operations amidst exit scam rumors

Jan 13 2020 15:53:10

  Crypto exchange Cobinhood announced they’re shutting down temporarily last week to audit all accounts' balances. However, many suspect that the people behind the operation are actually pulling an exit scam. Read more

FCA to pay £2500 for misleading investor who lost £50000

Jan 12 2020 10:52:48

The Financial Conduct Authority (FCA) in the UK has been ordered to pay 2500 GBP to an investor who lost 50 000 GBP, because of an error on the FCA financial services register, the Financial Times reports. Read more

FCA becomes AML/CTF supervisor of crypto businesses in the UK

Jan 10 2020 16:08:30

  As of today, the UK Financial Conduct Authority (FCA) becomes supervisor of crypto-asset businesses for anti-money laundering and counter terrorist financing (AML/CTF) purposes. Read more

de | cn | ru