Fury over EU ‘interfering’ crackdown on Bitcoin trading - will YOU be hit?
BITCOIN trading in the UK could be capped under new rules announced by Brussels. The European Union’s markets watchdog is considering a crackdown on the sale of ‘contracts for differences’ (CfDs), which allow anyone to speculate on the future of digital currencies such as Ethereum, Ripple XRP and Litecoin.
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CfDs are a risky but potentially lucrative investment which is essentially a bet on the price movement of a market, such as cryptocurrencies but also other commodities like oil and gold.
They differ from holding shares in a company or keeping Bitcoin in a digital wallet because punters are speculating on a price change rather than owning the underlying instrument.
But new regulations being considered by the European Securities and Markets Authority (ESMA) could limit the amount amateur traders can invest, a measure the watchdog says may be needed to protect retail clients.
However, the move has been branded “disproportionate” by Britain’s biggest online trading site, which claims the crackdown could cost it up to £50m in lost revenue.
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I’ve never known our customers to be as enraged as they are now
Peter Hetherington, chief executive of IG Group, said he agreed regulators had to act to address a “crazy” part of the market and the “massive” problem of amateur traders taking on too much risk.
But he said ESMA plans risked targeting the “wrong people”.
Mr Hetherington said: “Our product is for the one percent, not the 99 percent.
“We have significant wealth barriers - if you don’t have enough money, we won’t open an account for you.
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“I’ve never known our customers to be as enraged as they are now.
“We’ve had 2,500 responses from clients since the changes were announced on Friday.”
However, he added it was “crazy” complex trading was being advertised as a “leisure product” to the general public.
ESMA is currently consulting on its proposed crackdown, which it says have been prompted by a “rapid increase in the marketing, distribution and sale of contracts for differences” in recent years.
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And interest in cryptocurrency trading, particularly in bitcoin, Ripple and Ethereum, has only served to fuel this increase.
But the body said several national financial regulators have reported the vast majority - up to 89 per cent of clients in some cases - end up losing money on their investments.
A statement from ESMA added: "The inherent risk and complexity of these products, the marketing, distribution and sale through on-line channels and the associated aggressive marketing techniques used by a number of firms have led to significant investor protection concerns.”
A consultation period on the proposed changes is due to run until February 5.
