There has been a directive published by CySEC, aimed at all CFDs and FX brokers that also offer cryptocurrency trading, in which the financial regulator has outlined the requirements that need to be followed. As we see the rise in the price of cryptocurrencies, trading volume is growing at incredible speed with FX brokers. This means that at some brokers this is becoming a healthy percentage of their trading activity.

Before providing any kind of trading options in virtual currencies and CFDs, CIFs or Cyprus Investment Firms must warn traders about regulation, risk warnings etc. We decided to point some of them which we think is very important for the traders:

  • Trading with this kind of products is not covered by MiFID and therefore
  • There are no specific EU regulations that govern trading in such products
  • Risk warning text should be associated with these products
  • Virtual currencies values can have high volatility and may result in loss over a short period of time
  • Virtual currencies are not suitable for all investors and therefore, traders should not trade if they don’t have necessary knowledge in the specific product

Also, the main points of CySEC’s directives include some changes in the way traders will be able to trade with virtual currencies. This will bring some changes with brokers and strategies while trading cryptocurrencies at the financial market.

The main CySEC points

  • The leverage limit is set at 5:1 for trading in CFDs relating to virtual currencies
  • Every three months, volume from digital currency for each broker should not exceed 15% of total broker volume
  • There need to be more than one feed provider that brokers need to use for each digital currency that is offered
  • Virtual currency instruments are not subject to MiFID rights

This directive will certainly bring about changes in the financial market regulation associated with cryptocurrencies. This is sent to all Cyprus Investment Firms and was signed by Cyprus Securities and Exchange Commission Chairman Mr. Demetra Kalogerou.

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