French market regulator says MiFID II rules must apply
Curbs sought on electronic marketing of CFDs, derivatives
Cryptocurrency mining rigs operate in a cargo container at the Golden Fleece cryptocurrency mining company in Kutaisi, Georgia, on Monday, Jan. 22, 2018. Golden Fleece uses a cargo container with Chinese-built computers inside a dilapidated Soviet-era tractor factory to extract cryptocurrencies using low-cost electricity generated by water flowing from the nearby Caucasus Mountains. Bloomberg
France’s top markets regulator is getting tough on cryptocurrency trading.
The Autorite des Marches Financiers said on Thursday that online trading platforms for cryptocurrency derivatives fall under the European Union’s MiFID II regulations and face tough new reporting and business conduct standards. The platforms should also be barred from advertising the products electronically, a common practice in the industry.
The Paris-based AMF said the “recent cryptocurrency boom” spurred online trading platforms to offer binary options, contracts for difference and other derivatives tied to cryptocurrencies such as Bitcoin. That spurred the regulator to analyze the products, which have been offered by firms including Plus500 Ltd. and IG Group Holdings Plc.
The two derivatives brokers touted cryptocurrencies products in earnings reports this quarter. Kelsey Traynor, a representative for Plus500, said all of the firm’s CFDs, including those on cryptocurrencies, are compliant with the framework set out by the AMF. Representatives of IG Group didn’t respond immediately to requests for comment.
The French move is the latest front in an EU-wide crackdown on derivatives marketed to retail investors. The European Securities and Markets Authority, which sets standards across the 28-nation bloc, may cap leverage on the products and said in January that it was considering a prohibition on the marketing, distribution or sale of the products to retail investors. Regulators have cited the volatility of such products and the possibility of large losses among their concerns.
In London, U.K. lawmakers are launching an inquiry into cryptocurrencies to investigate their benefits and risks and consider how the new technology should be regulated.