Telephone 020 3813 2890 for a free no obligation chat about your regulatory requirements with one of our compliance consultants.

© Compound Growth Limited 2012 - 2018 | Terms of Use

Registered in England and Wales as limited company number 07626537 - Registered Office 120 Pall Mall, London, SW1Y 5EA

We use cookies, if you consent to this use, please continue to browse our site.

Here to help with Regulation and Compliance

Compound Growth

Cryptocurrencies & CFDs update

April 2018

Regulatory Focus:

This month the FCA published its Business Plan for 2018/19 in which it specified that so-called cryptocurrencies would be one of its cross-sector priorities for the coming year. In addition, just before the FCA published its Business Plan, they had published a statement on cryptocurrency derivatives and their regulatory status under MiFID II.

This follows just a month on from when ESMA, the European Securities and Markets Authority announced its decision to introduce leverage limits and other trading restrictions for firms offering Contracts for Difference (CFDs) based on cryptocurrency assets to retail clients.

Cryptocurrency derivatives

In the FCA’s recent statement, they confirm the regulator’s view that cryptocurrency derivatives are capable of being financial instruments under MiFID II and that firms conducting regulated activities in cryptocurrency derivatives will likely need to be authorised.

Amongst potential others, the FCA considers that the following cryptocurrency derivatives may constitute financial instruments within the scope of MiFID II:

CFDs – a cash-settled derivative contract in which the parties to the contract seek to secure a profit or avoid a loss by agreeing to exchange the difference in price between the value of the cryptocurrency CFD at its outset and at its termination; and

Cryptocurrency futures – a derivative contract in which each party agrees to exchange cryptocurrency at a future date and at a price agreed by both parties;

Cryptocurrency options – a contract which grants the beneficiary the right to acquire or dispose of cryptocurrencies.

It should be noted that currently cryptocurrencies are not considered to be currencies or commodities or financial instruments under MIFID II and that activities in relation to cryptocurrencies themselves do not generally require authorisation.


News & Views News & Views

Read our latest articles, news and views affecting compliance and regulation in the UK Financial Services Industry.

Compliance Support from Compound Growth Ltd

Please contact our Compliance Support Team for a free no obligation discussion of your regulatory requirements and how our regulatory & compliance consultants can help your business move forward compliantly.

Send Email

Call by Telephone:

(020) 3813 2890