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First Fully Regulated Crypto Exchange Launches

Achieving full regulatory approval before a crypto exchange is launched is a big deal. Liechtenstein based Blocktrade.com has been granted approved by the Financial Markets Authority, a member of the European Securities and Markets Authority (ESMA), and is set to be the first regulated exchange to open for testing.

The firm has been regulated under the MiFID II framework according to a Forbes report. According to the website;

“Until now, crypto trading has been unavailable to financial institutions. Blocktrade.com will be the first trading venue, fully regulated under MiFID II framework. Furthermore, the platform is able to process more than 1 million trades per second and the performance is being improved every day.”

Luka Gubo, CEO of Blocktrade.com, added; “This is an ideal way for regulators across Europe to recognize cryptocurrencies as a new asset class and put in a regulatory framework,”

Initially Blocktrade.com will offer Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Ripple’s XRP trading pairs. Later this year it will offer Crypto Traded Indices, Security Tokens, and Tokenized Assets. It is expected to fully roll out the exchange in September, at the moment only registration is open.

Many institutional investors still regard unregulated exchanges, of which there are over 170, as risky due to lack of transparency. Garbo maintains however that there is still substantial demand for crypto investments from fund managers;

“If an institutional investor wants to invest in cryptocurrencies, they currently have a problem. Where do you send the order to buy? There’s a lot of speculative valuing in cryptocurrencies, so there’s currently no way to lower the volatility — proper regulation is the only way to lower that risk.”

He went on to say that more institutions entering crypto markets will reduce some of the volatility which is also putting off a lot of traditional investors. He also believes that ICOs will eventually be traded on the exchange as the technology is available but they have yet to be regulated.

Gubo commented on the Stock Exchange view of new crypto exchanges; “They see other new crypto exchanges as competition. They are breaking the law and have a huge unfair advantage because they don’t need to follow any rules.”

More regulated exchanges and the possibility of the US Securities and Exchange Commission (SEC) introducing a Bitcoin exchange traded fund (ETF) could have a very positive impact on the industry and crypto prices.

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EU Markets Watchdog Toughens Rules on Crypto Derivatives

The European Securities and Markets Authority (ESMA) has toughened its stance on cryptocurrency derivative contracts.

In an announcement Tuesday, the EU markets watchdog said it has agreed to temporarily adjust the leverage limit for cryptocurrency-related “contracts for difference” (CFD) products to 2:1 – a move that will require retail investors to initially pay at least 50 percent of the total CFD value.

With a CFD, one party agrees to pay the other party if the value of the underlying asset changes.

The policy comes after the agency started a public consultation process in January, arguing at the time that the volatility of cryptocurrencies as an underlying asset for CFDs poses serious concerns for retail investor protection.

With initial leverage then standing at 5:1 – meaning investors could pay just 20 percent of the total CFD value initially – the agency had mulled either a lower leverage limit (2:1 or 1:1) or even banning distribution, marketing or sales of these products altogether.

In today’s announcement, the ESMA indicated that cryptocurrencies still remain an area of concern, and may consider tougher measures in the future in order to protect investors.

The regulator stated:

“Due to the specific characteristics of cryptocurrencies as an asset class the market for financial instruments providing exposure to cryptocurrencies, such as CFDs, will be closely monitored, and ESMA will assess whether stricter measures are required.”

The new measure come at a time when the cryptocurrency market is seeing growing interest from retail investors, and brokers and dealers have responded to this demand with new products.

For instance, just this Monday, Swiss bank and securities dealer Dukascopy announced it is now offering bitcoin/US dollar CFDs through its retail client accounts, with future plans to offer purchase and sales of the underlying cryptocurrency assets.

EU flag image via Shutterstock

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Cryptocurrency Tops EU Watchdog's 2018 Agenda

The European Union’s top securities watchdog is has indicated that cryptocurrencies will be one of the agency’s top priorities in 2018.

In its latest supervisory work agenda released on Feb. 7, the European Securities and Markets Authority (ESMA) outlined the five primary areas that the agency will focus on in the coming year.

One of the tasks for 2018 will be monitoring the development of financial innovation, which, as the agency specifically pointed out, includes cryptocurrency and blockchain technology.

The authority states:

“ESMA expects the rapid pace of financial innovation developments across the EU securities markets to continue in 2018. These developments influence the way in which securities are developed, traded and supervised. In turn, ESMA is undertaking material analysis on the emergence of such instruments as virtual currencies, such platforms as ICOs and such tools as the distributed ledger technology.”

Notably, this is the first time that the watchdog has included cryptocurrency into its supervisory agenda, signaling the increasing scrutiny the regulator is applying to the growth of cryptocurrency and blockchain technology in the European region.

Just last month, the agency also announced that it is seeking public feedback on possible regulatory changes around cryptocurrency derivative contracts.

Elsewhere in the latest report, central banks of EU member states (collectively called the National Competence Authorities, or NCA) are also set to follow the ESMA’s effort in 2018, focusing on questions about financial innovation in areas such as ICOs and cryptocurrencies.

EU flags image via Shutterstock

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