EU Watchdog to set Limits on CFDs and Cryptocurrencies

ESMA has declared leverage limits on the provision of contracts for CFDs and cryptocurrencies for retail investors in the EU
28 March 2018   623

The European Securities and Markets Authority (ESMA) announced these measures as temporary ones. The orders will be issued in the EU's official journal and come into force in one month for binary options and two months for CFDs.

The intervention measures for CFDs contain leverage restrictions on the opening of a CFD by a retail client from 30:1 to 2:1. The impact limits are: 30:1 for major currency pairs; 20:1 for non-major currency pairs, gold and major indices; 10:1 for commodities other than gold and non-major equity indices; 5:1 for individual equities and other reference values; and 2:1 for cryptocurrencies.

The other intervention measures include the following:

  • a margin implementation rule per account. It will ration the percentage of of margin at 50% of minimum initial required margin, demanding providers to close out 1 or more of a retail consumer`s open CFDs; 

  • the account basis protection from the negative balance. This will state a guaranteed limit on retail client losses;

  • the bound of the motivation suggested to trade SFDs;

  • a risk prevention comprising the percentage of losses on a CFD provider`s retail investor accounts, delivered in a normalized way.

So the market for financial instruments providing exposure for cryptocurrencies will be closely monitored. The application of leverage limits can also maximise the possibility of a larger gain. Automatic margin close-out makes a degree of defence for investors as it declines, though it does not exclude, the risk that the investor loses all or more than their initial margin.

ESMA has decided to will implement a 3-month ban on the marketing, distribution or sale of binary options to retail investors since the risks connected with the inherent features of binary options, such as an expected negative return and inherent conflicts of interest, make these products unsuitable for retail investors.

In contrast with the options that can serve a valuable role in hedging exposure to certain assets, binary options do not correspond any real investment needs for retail investors. These options can also attract compulsive gambling behaviour.

SEC to Accuse Veritaseum ICO of Fraud

SEC believes that project's tokensale, thru which it raised $14.8M back in 2017-2018 had a signs of scam and company misled the investors
14 August 2019   304

The U.S. Securities and Exchange Commission (SEC) has sued New Yorker  and Veritaseum-related companies that have been caught by the agency in conducting an unregistered ICO with signs of fraud. It is reported by Cointelegraph.

According to documents published on the network, the SEC intends to hold Reggie Middleton accountable and immediately freeze the assets of Veritaseum Inc. and Veritaseum LLC.

The Commission claims that the defendants raised about $ 14.8 million through an initial coin offering (ICO) in 2017 - early 2018. At the same time, many investors were misled, as the company distorted information about the conditions of the token sale and deliberately hid some significant details.

The American regulator claims that the project still has about $ 8 million of illegally raised funds. According to the SEC, these assets must be frozen immediately.

Amid this news, the Veritaseum (VERI) rate has fallen by 70%. Now the coin is trading near the $ 5 mark, although at the beginning of 2018 its rate was approaching $ 500.

Veritaseum was created as a financial p2p platform, involving the movement of capital without traditional intermediaries. Also, VERI was positioned as a utility token for use in consulting services and access to various research works.

In 2017, Veritaseum blockchain startup fell victim to hackers, having lost $ 8.4 million from ICO investors.