A statement by the firm stated that it has reached its internal product limit for exposure to cryptocurrencies and removed them from its offerings
UK-Based Broker I.G. Group has informed retail traders to close their derivative positions on cryptocurrencies on its platform. This comes after the U.K.’s Financial Conduct Authority (FCA) banned the sale of crypto derivatives and exchange-traded notes on January 6.
IGG revealed the move in a post from an administrator on IGG’s online forum on Sunday.
The statement stated that the firm has reached its internal product limit for exposure to cryptocurrencies and removed them from its offerings. This includes open spread bet and CFD positions on cryptocurrencies.
The post further urged traders to close all relevant cryptocurrency positions before March 24 at 15:00 local time. After that, IGG will close all positions still open based on the available bid/ask prices. The broker also revealed that it would be increasing its margin requirements according to the new regulations. There could also be significant changes to its crypto trading requirements in line with regulatory requirements.
The decision by IGG comes after the FCA banned the sale of derivatives and exchange-traded notes, and stated that such financial products were too risky for retail consumers who could quickly lose money.
It also stated that market abuse and financial crime in the secondary market as well as inadequate understanding of crypto assets by retail consumers made it apparent for such products to be banned.
Derivative exchanges within the U.K have restricted clients from trading cryptocurrencies on their platforms since the ban was implemented. Though, many crypto stakeholders have been critical of the decision by the FCA.
Chief among the criticism is that banning cryptocurrency derivatives would drive retail users to unregulated platforms that will offer less protection than regulated exchanges. However, it is unclear whether traders in the U.K have stopped trading derivatives since the ban’s inception.
The U.K is one of the largest markets of crypto adopters, and it is unlikely that traders will abandon the lure of high rewards on derivatives for other trading options. Other countries are also considering banning cryptocurrency trading with Nigeria recently offering a blanket ban on crypto exchanges and India set for a strict crypto regulation law.