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The European Securities and Markets Authority (ESMA) has announced that it will impose restrictions on the leverage offered for contracts-for-difference (CFDs) and binary options offered to European retail investors. Under the new measures, the leverage offered on cryptocurrency CFDs will be limited to no more than 2:1.
Also Read:Â PBOC to Strengthen Cryptocurrency Regulations in 2018Â
European Securities Regulator Imposes Restrictions on Leverage Offered by CFD Providers
ESMA has agreed on what it describes as âtemporary product intervention measures on the provision of [CFDs] and binary options to retail investors in the European Union (EU).â
The new measures will see restrictions on the leverage offered on cryptocurrency CFDs to no more than 2:1. The agreements will also mandate that traders provide an initial margin of â50% of the notional value of the CFD when the underlying [asset] is a cryptocurrencyâ â more than twice the initial margin required of any other CFD.
New Measures See Harshest Rules Imposed on Cryptocurrency CFDs
ESMA has stated that cryptocurrencies CFDs states that âCFDs with cryptocurrencies as an underlying raise separate and significant concerns as CFDs on other underlyingâ assets.
The regulator stated that âCryptocurrencies are a relatively immature asset class that pose major risks for investors.â ESMA expressed âconcerns about the integrity of the price formation process in underlying cryptocurrency markets,â arguing that such âmakes it inherently difficult for retail clients to value these products.â
ESMA concluded that âDue to the specific characteristics of cryptocurrencies as an asset class the market for financial instruments providing exposure to cryptocurrencies, such as CFDs, will be closely monitored.â Based on its findings, ESMA âwill assess whether stricter measures are required.â
New Rules to be Formalised in âComing Weeksâ
The measures will also see restrictions of 30:1 placed on âmajor currency pairs;â 20:1 for ânon-major currency pairs, gold and major indices;â 10:1 for âcommodities other than gold and non-major equity indices;â and 5:1 on âindividual equities and other reference values.â
ESMA states that it âintends to adopt these measures in the official languages of the EU in the coming weeks.â
What is your response to the new restriction on the leverage offered by European CFD providers? Share your thoughts in the comments section below!
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The post New ESMA Measures Impose 2:1 Restriction on Leverage for Crypto CFDs appeared first on Bitcoin News.
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