France AMF Bans Crypto CFD online ads, and publishes a warning to the CFDs brokers that offer the products to the French investors. The AMF states that the products are in violation of the Sapin 2 Law.
22 February, AtoZForex – French financial regulator, the French Autorité des Marches Financiers (AMF) has made an announcement on its website in regards to the cryptocurrency market operations. The French watchdog has informed the public that it has decided to ban the advertising of cryptocurrency derivatives across the country.
France AMF Bans Crypto CFD Online Ads
The supervisor of the French financial markets has also published a warning to the CFDs brokers that offer the products to the French investors. The AMF states that the products are in violation of the Sapin 2 Law that has been introduced last year.
As per the ruling of AMF, the legal qualification of cryptocurrency derivatives obliges brokers operating in this sector to comply with the regulatory framework. These entities must seek approval from the regulator before offering such contracts to clients. They also should follow the rules of good conduct.
According to the regulator, brokers are prohibited from providing derivatives on cryptocurrencies and the products should not be promoted across the country. In addition, the French regulator has outlined that the cryptocurrency market popularity increase has led to the drop in the Binary Options and CFDs offerings from the Forex brokers. Now, the contracts enable clients to bet on the rise/fall of a cryptocurrency without holding an underlying asset.
What is the reason behind the decision?
The AMF stated it has made this decision is following a comprehensive legal analysis of derivatives contracts on cryptocurrencies. The legal reasoning constitutes that to qualify as a legal product, a derivative product needs to consider the evaluation of whether a cryptocurrency can be considered as an underlying asset that is eligible under the MiFID regulations.
Presently, the European regulatory framework is limiting the derivative products by the legislative definition for the underlying assets. Moreover, the AMF considers that a cryptocurrency contract settles through a cash settlement can be seen as a financial contract. However, this can happen only after the approval, good conduct and the reporting of transactions to the central repository under the EMIR European regulation.
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