CySec has introduced new rules for Forex brokers offering cryptocurrency CFDs

May 15, 2018 at 10:40 PM

Сyprus financial regulator (CySec) has introduced a new set of the rules governing brokerage companies should follow when offering on virtual currencies, specifically cryptocurrency CFD trading to clients. The Cyprus Securities and Exchange Commission, known as CySEC (www.cysec.gov.cy), is the financial regulatory agency of Cyprus. As an EU member state, CySEC’s financial regulations and operations comply with the European MiFID financial harmonization law. A significant number of overseas retail forex brokers have obtained registration from CySEC. The main point of bringing in the changes in the regulation is that the cryptocurrencies themselves are not considered financial instruments as defined by European rule-setter ESMA, so the derivatives of the cryptocurrencies including crypto CFDs are financial instruments. All Forex brokers who provide crypto trading should do that only through CFD form and not in actual cryptos. If FX broker is offering crypro CFDs trading from Cyprus, it must be authorised and must comply with the applicable national legislation, directly applicable European Union regulations, the Guidelines or Recommendations issued by the European Supervisory Authorities (ESMA and the European Banking Authority)adopted by CySec and needs to follow the presented set of rules for crypto trading. The CySec and its members consider that the risks connected with the crypto CFD trading are high. So Cyprus Investment Firms (CIFs) should consequently approach the provision of such services with caution, in the knowledge that close attention will be paid to all of their legal obligations.