Last week it was reported that over twenty Forex Brokers are either selling their CySEC licenses or abandoning them all together. One reason for this was the recent ESMA rules that will make doing business in Europe far more challenging and way more expensive.
CySEC has a questionable reputation as a regulator after the abuses of the Binary Options Brokers as well as the Ironfx fiasco. Unfortunately, many brokers had little intention in following the regulatory framework and were merely looking for a badge they can put on their website. CySEC did little to protect clients from abusive brokers and issued pathetic fines in response to the worst of them.
It seems only natural that CySEC would move in the direction of Cryptocurrencies regarding regulations. This might not be the case as Cyprus regulator recently clarified its position that Cryptocurrencies must be in CFD form to be offered by their brokers and that leverage would be limited to 2:1. There is also the concern that many from the Binary Options Industry have made their way to the Crypto world and the same problems would occur.
ESMA Rules a response to CySEC Lack of Oversight
The European Securities and Markets Authority had been dealing with hundreds of complaints about the inaction and lack of oversight on the part of CySEC. It appears that the ESMA had enough of CySEC and the growing numbers of co plaints against its brokers.
A Culture of Corruption
CySEC is a place that welcomed many questionable brokers and their activities and was all too ready to protect these bad brokers. The most infamous being Ironfx which has recently renamed and rebranded itself. There are many examples of CySEC stonewalling and doing anything to protect brokers that refused to process client withdrawals. As the situation in Cyprus continued to deteriorate European regulators decided enough was enough and instituted the harsh regulations that lead to many of these brokers departing the troubled island.