The Autorité Des Marchés Financiers in France has concluded that platforms which offer these products must abide by the authorisation and business conduct rules, and that these products must not be advertised via electronic means which pretty much shuts down any and all promotion in France.
The AMF said that following an analysis of the legal qualification of cryptocurrency derivatives, they have reached the conclusion that platforms which offer these products must abide by the authorisation and business conduct rules. The regulatory agency said the recent cryptocurrency boom has spurred several online trading platforms to offer binary options as well. They also mentioned CFDs or Forex contracts with an end-of-day maturity (rolling spot forex), where the underlying is a cryptocurrency. Such contracts allow investors to bet on a cryptocurrency’s rise or fall, without holding the underlying and thus regulated securities.
The AMF’s process of reasoning is described as twofold: on the one hand, to determine the legal qualification of the notion of “derivative” in the context of cryptocurrency derivatives and on the other, to consider whether a cryptocurrency could be legally regarded as an “eligible underlying.” The AMF says the notion of “derivative” is not defined in EU legislation per se. Within the MiFID framework, EU lawmakers only set out a list of derivatives (such as options, futures, swaps or forwards), followed by a list of eligible underlyings.
The AMF concludes that a cash-settled cryptocurrency contract may qualify as a derivative, irrespective of the legal qualification of a cryptocurrency.
Online platforms which offer cryptocurrency derivatives fall within the scope of MiFID 2 and must therefore comply with the authorisation, conduct of business rules, and the EMIR trade reporting obligation to a trade repository. These products are subject to the provisions of the Sapin 2 law, and the ban of advertisements for certain financial contracts.
