February 22, 2021 7:54 pm UTC,Rick Steves
IG Group’s UK operation plans to end cryptocurrency trading in its platform by March 24, 2021. The decision follows the imposed ban on the trading of digital assets by the Financial Conduct Authority in the UK.
The retail FX and CFD broker has restricted UK retail clients from increasing their exposure to cryptocurrencies since 6 January. The trading platform will also increase margin requirements for existing positions on Bitcoin, Bitcoin Cash, Crypto 10 Index, EOS, Ether, Litecoin, NEO, and Stellar.
The announcement was made to the IG community platform by administrator CharlotteIG, who will take note of all feedback regarding cryptos and will pass on to senior management.
“Please ensure that you close all your open spread bet and/or CFD positions on cryptocurrencies by no later than 3pm on Wednesday 24 March 2021, from which point we will start to close any positions still open based on our prevailing bid/ask prices. This action is taken in accordance with Term 28(3) of the latest version of the applicable customer agreement governing your account(s) with IG”, said the announcement.
IG Group was required to take measures by the UK financial watchdog after the FCA issued a ban on the sale of derivatives and exchange traded notes (ETNs) that reference certain types of cryptoassets to retail consumers.
“The FCA considers these products to be ill-suited for retail consumers due to the harm they pose. These products cannot be reliably valued by retail consumers because of the:
inherent nature of the underlying assets, which means they have no reliable basis for valuation
prevalence of market abuse and financial crime in the secondary market (eg cyber theft)
extreme volatility in cryptoasset price movements
inadequate understanding of cryptoassets by retail consumers
lack of legitimate investment need for retail consumers to invest in these products
These features mean retail consumers might suffer harm from sudden and unexpected losses if they invest in these products.”
The regulator stated that retail consumers are estimated to save around £53m from the ban on these products. The ban announcement was issued in 6 October 2020 and it retail brokers started to enforce the new restriction in 6 January 2021. The total ban will take effect in 25 March 2021.
In 6 October 2020, Bitcoin was priced just over $10,000. In 6 January 2021, Bitcoin was on its way to $40,000, and it is now above the $50,000 milestone.