The Autorité des marchés financier, France's financial regulator, published a release yesterday, advising FX trading platforms offering cryptocurrency derivatives (like Bitcoin/Litecoin CFDs) to adhere to existing industry rules. The French agency also told business to cease advertise these offerings to the general public via electronic means.
The agency also explained that the burgeoning cryptocurrency industry has pushed many online Forex brokerages to offer binary options and cryptocurrency CFDs instruments, where the underlying asset is a cryptocurrency like bitcoin. Retail investors are lured into making bets on the future price movements of these very volatile assets, but without actually holding the cryptocurrency itself (Bitcoin, Litecoin, Ether, etc..).
According to the AMF's legal research, instruments such as Bitcoin CFDs and binary options do not fall under existing EU MiFID framework, which deals mainly with options, futures and swaps. But the agency clarified that "cash-settled cryptocurrency contract" may be considered a type of derivative, regardless of the legal standing of cryptocurrencies under existing EU laws.
Based on this reasoning, the AMF stated that derivateives dealers that offer these instruments to European retails investors must follow the rules of existing MiFID 2 legislation:
"Above all, these products are subject to the provisions of the Sapin 2 law, and notably the ban of advertisements for certain financial contracts."
