Spain – a country with no clear regulation regarding cryptocurrencies – is singling out an FX broker known as FX Trading Corporation. Spain is warning traders to watch out for this company after it was allegedly discovered facilitating trading assets for residents without having undergone the appropriate registration protocols.
A Country Takes Necessary Action
- 1 A Country Takes Necessary Action
- 2 We’re Seeing This Everywhere
- 3 Following Big Brother’s Lead
- 4 Europe Is Taking No Chances
The Commision Nacional del Mercado de Valores (CNMV) – Spain’s equivalent of the Securities and Exchange Commission (SEC) – is accusing the company of providing unlawful financial services to its customers, which is a violation of Article 17 of Spain’s Securities Markets Law. While full details have not been offered at this time, the organization is adding the company to its list of ventures to watch out for.
As mentioned before, Spain does not boast clearly defined cryptocurrency laws, and only provides a definition of virtual assets for anti-money laundering (AML) purposes. Thus, it can be said that in no corner of the world are crypto companies getting away with not doing what’s required of them, even when the governments that oversee them don’t have solid plans.
We’re Seeing This Everywhere
No doubt, this kind of scenario has been witnessed time and time again in the United States. Recently, the SEC made headlines when it announced it was fining AirFox and Paragon Coin for failing to properly register their ICOs as securities. Both ventures were forced to pay as much as $250,000 each, though executives of each company have stated that they’re grateful they can return to normal operations and that the situation wasn’t any worse.
Smaller institutions are also taking it upon themselves to lay down the law appropriately. Recently, the Texas State Securities Board issued a cease-and-desist letter to My Crypto Mine and its alleged chief executive Mark Steven Royer of Del Mar, California after he began promising his customers “guaranteed, no risk returns” of roughly ten to 20 percent each month.
The board states that Royer has made false and misleading claims on both the company’s website and its social media pages that could do vast and “irreparable harm” to investors. Regulators are now asking Royer to stop making such claims until they’ve had a chance to investigate his operations further.
Following Big Brother’s Lead
The CNMV is basically following the same steps as other major European regulators looking to put a damper on illegal crypto firms. Over the past 24 months, the organization has put out several notices to customers regarding both risk disclosures and trading costs, while trying to set the stage for crypto advertising requirements. These changes primarily apply to companies that offer forex, contracts for difference (CFDs) and binary options for Spain-based retail investors.
The CNMV is also requiring brokers offering “excessive leverage” greater than ten to one to inform customers that these kinds of products should not apply to retail investors due to their risks and overall complexity. Companies are also required to inform traders that closing their positions early could come with heavy costs.
Europe Is Taking No Chances
The regulation isn’t just occurring in “stately” form. Rather, all of Europe appears to be linking arms over crypto, with associations like the European Securities and Markets Authority (ESMA) publishing advice to members of the European Union on things like ICOs and related crypto ventures. It is the primary thought of ESMA members that while cryptocurrencies themselves do not influence or affect the monetary market on an individual level, activities surrounding crypto like ICOs are a different story.
In an official statement, the organization explains:
“More regulation of crypto activities and related activities could have compromises, such as the risk of legitimizing crypto activities and encouraging broader adoption. However, there is a wide range of crypto activity in circulation, and only a small part of it is destined to qualify as MiFID financial instruments.”