One of the largest UK regulated Forex Brokers Plus 500 reported record earnings recently. The company had seen a $77.5 Million increase in revenue versus the quarter from last year. Plus 500 attributed crypto CFD trading to the dramatic jump in revenues. Revenues for the quarter were nearly $300 million and signifies the importance of crypto trading for Forex Brokers.
There remains a great deal of uncertainty when it comes to the regulatory status of Cryptocurrency CFDs. The UK regulatory authority FCA has elected not to regulated crypto CFDs at this time. This might change as the popularity of crypto CFD trading increases along with the risks associated with such products. To try and deal with these risks many brokers have instituted substantial fees for maintaining overnight positions.
eToro the well-known social trading site recently announced that it would be converting open crypto CFD positions to a non-leveraged physical position. The company has indicated that this move was made out of the interest for their clients. It might be that there are regulatory signals that crypto CFD trading might be the next target post-ICO.
The ESMA or European Securities Market Authority recently weighed in regarding the risks of cryptocurrency CFDs and leverage. The European regulated announced that it would limit the leverage offered on these products to 2:1 or 50% of the notional value. The European regulator made it quite clear that it will be watching crypt CFD trading closely and will implement stricter regulations as it sees fit.
Forex Brokers are now faced with a decision to on whether or not to continue to offer a very popular product that is drawing increasing scrutiny from regulators. The recent revenue report from Plus 500 makes that decision all the more difficult.