If you want cryptocurrency trading to be among your activities and also if you want to do it in a professional way, being up to date with the regulatory news and taking them into account is something that you obviously need to do.
There was this mindset especially last year when most of the market participants were thinking that cryptocurrencies will remain 100% untouched by any central government or financial agency. It is true that before the cryptocurrency market cap had started to rise strongly, governments were not considering digital assets too significant, but with their rise in value and no regulation, scam ICOs, exchange hacks, and scandals related to cryptocurrencies had put into question this independence from public authorities.
ESMA took some measures this year
Known for its stricter financial rules, the European Union, through the European Securities and Markets Authority (ESMA) had stepped up and came up with some serious modification for online trading.
Among the measures we can mention the reduction of leverage for retail traders to a maximum of 30:1 (which only applies for major currency pairs) and to as low as 2:1 for cryptocurrency- related CFDs. With that being said, crypto currencies regulation, especially for those trading CFDs on cryptocurrencies is now stricter and people with little or no experience can only trade with these restrained conditions.
Do the measures solve anything?
As the ESMA had augmented its decision, one of the main reasons behind these changes had been the high level of unprofitability among retail traders. Studies conducted on a series of brokers show that sometimes more than 80% of the clients end up losing their initial investment, due to excessive risks (generated by the high level of leverage).
From this point of view, the reduction of leverage protects retail clients from overexposing themselves and thus reduces the likelihood of them losing a lot of money. Still, the measures only apply for retail traders. Most of the brokers had designed special offers for professional clients who have an actual track record and experience in the markets. Traders who qualify can still benefit from trading conditions better than those with little or no experience. If we talk about cryptocurrencies, more measures are expected to come in the months ahead, so if you want to get involved and trade cryptocurrencies, make sure you are constantly up-to-date with the latest developments.