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CySEC limits the leverage for cryptocurrency CFDs to 1:2

May 16 2018
By
Jonathan Smith

The Cyprus Securities and Exchange Commission (CySEC) issued new guidelines regarding the cryptocurrency products offered by the plethora of brokers overseen by them. The country is a popular choice of those who are looking to do business in the European Union, as being regulate there grants you access to clients in all member states.


The document begins by reiterating the key principle established by European Securities and Markets Authority (ESMA) – “while cryptocurrencies themselves aren’t seen as financial instruments, derivatives, such as CFDs, based on them are”.  This immediately implies all companies in Cyprus which offer these assets (the majority of forex brokers) should be overseen by the local watchdog and follow the appropriate rules. They include a procedure for verifying the price quotes provided, as well as cutting the maximum leverage offered to 1:2. All of this is in line with the upcoming significant changes, enforced by ESMA, which include limiting all leverage ratios and a total ban on binary options.

 

>>Our detailed comparison of cryptocurrencies and CFDs<<


CySEC also exclusively highlights the fact brokers must mention the risks involved with these complicated assets and even more specifically the high rollover fees. As we have mentioned multiple times in our reviews of cryptocurrency exchanges, credibility in the field may be lacking, as companies are rarely regulated, but this is still a better option for long term investing. In case you want to hold Bitcoin for years, a CFD will simply not serve that purpose well. Be sure to learn about the different types of wallets and consider storing your coins off-exchange, in case you don’t want to sell them soon.


The key takeaway from the announcement is the fact CySEC is willing to acts before the EU-wide rules are officially in place. Check our list of forex brokers in Cyprus, if you are looking for a reliable trading partner, which operates under strict regulation.
 

TAGS: CySEC  cryptocurrency  cfd  leverage 
Forex
Broker Country Regulation Platform Min Deposit Review
Cyprus, UK, Mauritius CySec, FCA, FSC MT4, MT5, Web $10 Review Website
Cyprus, SVG CySEC MT5, Web,
cTrader
$100 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
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 MT5 $5 Review Website
UK FCA MT4, Web, MT4
for Mac
$100 Review Website
Australia, UK ASIC, FCA MT4, MT5,
cTrader
$200 Review Website

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