Forex broker FxOpen has announced the cessation of CFD trading on digital currencies for its UK clients. The company attributed the move to a ban imposed by the UK’s Financial Conduct Authority (FCA) on the sale of cryptocurrency-based derivatives to retail traders, Finance Magnates writes.
The FCA-regulated broker will stop supporting such products on 5 January 2021, the day before new rules regarding CFDs and ETNs on digital currencies come into force. It only applies to retail clients of the UK arm of FxOpen Group and does not affect professional investors.
According to the FCA, crypto derivatives are not suitable for retail traders due to Crypto Trader a lack of understanding of their nature and the volatility of digital currencies. As a result, traders cannot fully assess the risks associated with such products.
FXOpen has informed clients to close their current positions by 15:00 GMT on 5 January, otherwise it will be forced to do so at the market rate at the indicated time.
In 2016, FxOpen was the first forex broker to offer CFD trading on cryptocurrencies. In March 2017, the firm began accepting deposits in Tether (USDT).
As a reminder, a new tax regulation coming into force in Germany in 2021 will put crypto derivatives trading under a de facto ban in that country.