Autorite des Marches Financiers, the financial regulator of France, recently published a press release pertaining to cryptocurrency derivatives. According to the press release, cryptocurrency derivative platforms will not be allowed to advertise their products. Also, according to the press release, the platforms should be approved by the regulator before offering the investment solutions.
Derivative Trading Rules
AMF is of the opinion that digital assets meet the definition of financial instruments. This is the reason why it believes that they should stick to the Markets in Financial Instruments Directive (MiFID) drafted by the financial regulator.
The press release also mentions that cryptocurrency platforms should get approvals before operating. They should refrain from advertising as it goes against the conduct of business rules. The rules and regulations which they would have to abide by are the EMIR. These rules and regulations also require the reporting of the derivative trade to the trade repository. This would, in turn, bring enhanced transparency in cryptocurrency trading. On the other hand, for the cryptocurrency exchanges, it would be difficult to comply with.
The Finance Minister of France, last month had clearly stated that individuals and companies would not be allowed to use cryptocurrency for money laundering. The Finance Minister had stated that the government is taking steps to avoid evasion of taxes as well as financing of terrorism with the help of cryptocurrencies. It seems like; this move by the top financial regulator in France is a step in the same direction.
If indeed, cryptocurrency exchanges abide by these rules and regulations, it would be easy to bring in more transparency. Moreover, the derivative instruments will not be misused in order to make the retail investors lose money. This is an added advantage of these rules and regulations. Also, with the approval of such platforms, only the credible platforms would be allowed to operate. This would mean that retail investors would be able to trade on completely safe platforms.
Most of the cryptocurrency enthusiasts believe that this is actually a positive move for most of the cryptocurrency platforms. They would be able to create a more transparent ecosystem for trading. Even though, not each and every exchange would be able to comply by the same but they would surely work within the legal framework of the products which they have on offer. Also, the lack of advertising would ensure that people are not lured to cryptocurrency. Only people who understand the risk would be able to go ahead and trade in cryptocurrency derivatives. This is a huge positive for the retail investors.