The European Securities and Markets Authority solicits public opinion on the policy of encrypting currency derivatives

nREVIEW: A few days ago, the European Securities and Markets Authority (ESMA) is seeking public feedback on possible regulatory changes to cryptocurrency derivatives contract types. As the base asset prices of these cryptocurrencies fluctuate widely and the cryptocurrency CFD with an initial leverage ratio of 5: 1 does not provide sufficient protection for retail investors, the ESMA is debating whether stricter enforcement of cryptocurrency CFDs should be implemented Restrictions, and to the public for comments.n
nTranslation: Clovern
The European Securities and Markets Authority (ESMA) is seeking feedback on possible regulatory changes to cryptocurrency derivatives contract types.n
ESMA said they are also studying how CFDs in cryptocurrencies can fit into their regulatory framework for MFIDs when they openly ask for CFD information. Under a CFD, if the value of the asset on which the contract is based changes, one party agrees to pay the other.n
Specifically, the ESMA is seeking advice on whether crypto-currency-based CFDs should be strictly limited, stating in a statement:n
nIn this case, ESMA is currently discussing whether the cryptocurrency CFD should be settled in management practices and whether the initial leverage ratio of 5: 1 will provide investors with a very large change in the underlying asset prices of these cryptocurrencies. Alternatively, consider a lower leverage ratio (2: 1 or 1: 1) or more stringent regulatory measures (such as prohibiting the promotion, sale or sale of cryptocarbon CFDs to retail customers). “n
nAccording to the paper, an initial leverage ratio of 5: 1 means that investors pay only 20% of the CFD’s total value. In this case, the broker who handles the investment lends the difference to the investor.n
The paper goes on to state that a 2: 1 or 1: 1 ratio may provide investors with better protection.n
At the same time, the paper notes that the safest course of action may be to completely ban retail investment in CFDs, and the ESMA also hopes to solicit feedback on this potential choice.n
Last year, the Financial Conduct Authority of the United Kingdom issued a warning to investors who are considering using crypto-based CFDs and called it “an extremely risky speculative investment.”n

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