UK’s financial markers and services providers regulator, the Financial Conduct Authority (FCA), has warned consumers of the risks of trading in cryptocurrency CFDs and noted they are “extremely high-risk, speculative products”.
The warning comes against the background of an increasing number of forex and CFD brokers offering this type of instruments, including some regulated by the FCA, such as IG, HYCM and XM.
The main risks outlined by the regulator include the high price volatility of the underlying assets such as bitcoin and ether. For example, the value of some cryptocurrencies recently fell by more than 30% in a single day.
Another risk is carried by the leverage. Unlike the cryptocurrency exchanges who offer leveraged trading with a relatively high margin requirement, some of the forex and CFD brokers offer leverage of up to 1:50. The leverage, however, is a two-edged knife and affects both profits and losses. Eventually a client can even end up owing money to the firm.
Furthermore, FCA notes that often charges on crypto CFDs are much higher than for other CFD products, as well the existence of wide variations between the pricing of cryptocurrencies and the risk of not receiving a fair and accurate price for the underlying cryptocurrency when trading.
In the past several months the forex and CFD brokers are falling all over themselves to offer various instruments with cryptocurrencies as underlying assets. Most offer CFDs, but there are some like eToro who offer cryptocurrency investment portfolios, while Swissquote teamed up with the cryptocurrency exchange Bitstamp to offer trading in bitcoin.
| Broker | Country | Regulation | Platform | Min Deposit | Review |
|
US | CFTC, NFA | MT4, Web, in-house |
$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, IRESSTrader |
$100 | Review Website |
|
Cyprus, Australia | CySec, ASIC | MT4, MT5 | $5 | Review Website |
|
UK, Australia, South Africa | FCA, ASIC, FSCA | MT4, Trading Station, NinjaTrader |
$50 | Review Website |
|
UK, Cyprus, UAE, South Africa | FCA, CySEC, DFSA, FSB | MT4, MT5, FxPro Markets, cTrader |
$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, cTrader |
$200 | Review Website |
The Malta Financial Services Authority (MFSA) adopted permanent rules restricting the marketing, distribution or sale of CFDs to retail clients. Read more
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
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
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
The Cyprus Securities and Exchange Commission warned against fraudsters impersonating its officers who are running a recovery room scam. Read more
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
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
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
The Secretary-General of the Thai Anti-Money Laundering Office (AMLO) stated that the existing anti-money laundering (AML) rules in Thailand will be amended as to also cover cryptocurrencies and prevent their use for illicit activities, as reported by local news media BangkokPost. Read more
The Australian Securities and Investment Commission (ASIC) has updated its warning list today with Alpha Financial Group, MGM Markets, Brokerz.com, and several other unregulated brokers. Read more
Forex trading carries a high level of risk and may not be suitable for all investors. Before you engage in trading foreign exchange, please make yourself acquainted with its specifics and all the risks associated with it. All information on ForexBrokerz.com is only published for general information purposes. We do not present any guarantees for the accuracy and reliability of this information. Any action you take upon the information you find on this website is strictly at your own risk and we will not be liable for any losses and/or damages in connection with the use of our website.
All textual content on ForexBrokerz.com is copyrighted and protected under intellectual property law. You may not reproduce, distribute, publish or broadcast any piece of the website without indicating us as a source. ForexBrokerz.com does not claim copyright over the imagery used on the website, including brokers' logos, stock images and illustrations.
Forexbrokerz website uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Read our Privacy Policy.
© 2019 ForexBrokerz.com
