European Markets Authority hardens rules on crypto derivatives

The EU markets watchdog has agreed to temporarily adjust the leverage limit for cryptocurrency-related “contracts for difference” (CFD) products to 2:1 - a move that will require retail investors to initially pay at least 50% of the total CFD value. With a CFD, one party agrees to pay the other party if the value of the underlying asset changes.

With initial leverage then standing at 5:1 - meaning investors could pay just 20% of the total CFD value initially - the agency had mulled either a lower leverage limit (2:1 or 1:1) or even banning distribution, marketing or sales of these products altogether.

Swiss bank and securities dealer Dukascopy announced on March 26 that they are offering Bitcoin/US dollar CFDs through its retail client accounts, with future plans to offer purchase and sales of the underlying cryptocurrency assets.
The policy comes after the agency started a public consultation process in January 2018, arguing at the time that the volatility of cryptocurrencies as an underlying asset for CFDs poses serious concerns for retail investor protection.