Citing MiFID Regulations, France’s AMF Bans Advertising of Crypto Derivatives

French independent market and financial regulator Autorité des Marchés Financiers (AMF) has issued a public statement on February 22, 2018, warning and prohibiting cryptocurrency exchanges offering derivative and binary options from advertising their products in electronic media.

Old Regulations Still Apply

The AMF is of the view that since these cryptocurrency exchanges offer these products as any other securities to investors, they must also come under the purview of the same regulations that govern trading in the spot and futures markets.

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The AMF is an independent public authority responsible for protecting investor savings in financial products in France. After undergoing a thorough analysis of these offerings and also reviewing the legalities involved in cryptocurrency derivatives trading, the fiscal authority has concluded that platforms offering such service must abide by the authorization and business rules set by the agency.

The regulations also have a provision for prohibiting the advertising of such products across electronic media.

CBOE, CME, MiFID, and FInancial Instruments

The meteoric price rise of bitcoin over the last year or so has given impetus to many cryptocurrency exchanges beginning to offer binary options and futures contracts. Earlier, exchanges would only offer to trade of cryptocurrencies with fiat currency.

However, after CBOE and CME started offering futures contracts for bitcoin, these cryptocurrency-exclusive exchanges also began offering forex contracts with a rolling end of the day maturity for digital currencies.

It must be noted here that the term ‘derivatives’ is not defined yet by EU regulations. However, the AMF believes that Markets in the Financial Instruments Directive II framework, more commonly known as MiFID, will govern these cryptocurrency exchanges as well.

The MiFID legislations were released on January 3, 2018, by ESMA and are designed to provide better transparency, thereby ensuring greater protection for investors. The ESMA has also previously issued a warning to investors, flagging the potential risks associated with investing in virtual currencies.

The AMF, in its press release on December 4, 2017, had said:

“In the case of crypto assets based on the blockchain and taking their technical characteristics, high volatility, and the absence of specific regulations into consideration, the AMF and the ACPR recommend that investors be extremely vigilant when considering to invest a portion of their savings in this asset.”

The independent regulator has concluded that cash settled cryptocurrency contract will qualify as a derivative, irrespective of the legality of the cryptocurrency. All cryptocurrency derivatives fall under the purview of the MiFID regulations and must comply with the regulations and must report to the EMIR trading repository.

The MiFID regulations highlight that platforms offering derivatives trading cannot advertise their products over electronic media and hence, even cryptocurrency exchanges providing futures contracts for cryptocurrency must comply.

The French Minister of Finance, Bruno Le Maire had, in a speech, promised a crackdown on the rampant illegal use of cryptocurrencies. He appointed Jean Pierre Landau, the former Executive Director of the International Monetary Fund and the World Bank in the early 1990s, to head a cryptocurrency task force aimed at preventing criminal activity with regards to digital currencies in January 2018.




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