About the ban
The U.K.’s Financial Conduct Authority (FCA) announced a ban on the sale of crypto derivatives to retail clients which came into effect in January 2021. The decision came amid concerns that due to their volatile nature, cryptocurrencies as an asset can pose a greater challenge for investors when it comes to attempting to speculate on their future valuation.
BDSwiss’ response to the ban
While many commentators, including Forbes’ Lawrence Wintermeyer, have criticised the recent ban and warned against it possibly having a negative future impact for the U.K. economy and its ability to maintain its dominant position as a global fintech hub, financial authorities like the FCA have long been entrusted with regulating the financial services arena, enhancing market trust and integrity and protecting consumer interests. As a multi-regulated broker, BDSwiss welcomes regulatory changes which seek to strengthen client protection and fully enforced the ban of cryptocurrency derivatives for all clients that are permanently residing in the UK, as well as for clients under the BDSwiss Ltd which is authorised and regulated by the Cyprus Securities and Exchange Commission (CySEC).
It is important to note that, prior to the ban, BDSwiss maintained a limited leverage ratio on all cryptocurrency derivatives of up to 1:5, and continues to invest heavily in appropriateness testing, traders’ education, and KYC controls, to ensure that all retail clients understand and acknowledge the risks involved in trading leveraged products prior to investing their capital.
How was the ban implemented?
BDSwiss took a number of steps to ensure that the crypto ban was conducted smoothly and efficiently, promptly informing all clients whose trading activity would have been affected by the ban. All affected clients received a number of emails informing them of the ban in late 2020 and were asked to ensure that any open positions were closed, as well as agree to the revised Terms and Conditions. The crypto ban was seamlessly implemented, and all crypto-derivative products were made unavailable to client accounts under CySEC entity and all clients residing in the UK as of January 1st, 2021. BDSwiss has notified its clients well in advance about all the relevant operational changes.
How was client trading activity affected?
While it is admittedly unfortunate that for a certain group of clients the option to trade this unique digital asset class was removed, BDSwiss’ overall client trading volume was not affected by the ban. Major forex pairs such as the EUR/USD continue to dominate investor interest and claim the majority of trades placed. Meanwhile, there are a number of other extremely popular asset classes, such as shares, commodities and indices, that remain available for trading to all BDSwiss clients with the same award-winning trading conditions.
How does the crypto ban affect BDSwiss Partners?
BDSwiss Affiliate and IB partners were not affected by the latest Crypto-derivatives ban and, as aforementioned, we saw no impact on client trading volumes. It is also important to note that crypto-trading remains available for all non-EU clients including clients under FSA and FSC. Crypto assets enjoy increasing interest in fast-growing markets including South East Asia and LATAM.
What does the future hold?
The FCA is open to reviewing the prohibition, but only if it sees strong evidence that the drivers of consumer risk have been materially addressed. Over the past four years, cryptocurrencies have become ubiquitous, prompting more national and regional authorities to grapple with their regulation, and their responses varied widely with both widespread bans and endorsements. As this is a relatively new asset class, regulations are bound to change, but we can only speculate as to what extent and effect.
In a fast-changing regulatory landscape, partnering with a transparent broker that is able to respond swiftly, efficiently and effectively to change, can be a determining factor to Partners’ success. BDSwiss focuses on providing exceptional trading services through a multi-regulated environment that ensures steady growth and success for the brand and its Partners.