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IGG revealed this development in a post from an administrator on IGG’s online forum on Sunday.
The statement stated that the firm had reached its internal product limit for exposure to cryptocurrencies and removed them from its offerings. This includes open spread bet and contract for difference (CFD) positions on cryptocurrencies.
The post further urged traders to close all relevant cryptocurrency positions before March 24 at 15:00 local time. After which, IGG will close all positions still open based on the available bid/ask prices. The broker also revealed that it would be increasing its margin requirements in line with the new regulations. There could also be significant changes to its crypto trading requirements as it looks to follow regulatory requirements.
FCA Ban Causing Ripple Effect on U.K. Crypto Market
IGG’s decision comes after the U.K Financial Conduct Authority (FCA) banned the sale of derivatives and exchange-traded notes. The regulatory body had claimed that such financial products were too risky for retail consumers who could quickly lose money.
It also stated that the prevalence of market abuse and financial crime in the secondary market and the inadequate understanding of crypto assets by retail consumers made it apparent for such products to be banned.
Since the ban was implemented, derivative exchanges within the U.K have restricted clients from trading cryptocurrencies on their platforms. The FCA ban is not without controversy, as many crypto stakeholders have been critical of the decision.
Chief among the criticism is that banning cryptocurrency derivatives would drive retail users to unregulated platforms that will offer less protection than regulated exchanges. Since the ban’s inception, it is unclear whether traders in the U.K have stopped trading derivatives.
The U.K is one of the largest markets of crypto adopters, and it is unlikely that traders will abandon the lure of high rewards on derivatives for other trading options. Other countries are also contemplating banning cryptocurrency trading with Nigeria recently offering a blanket ban on crypto exchanges and India set to put a strict crypto regulation into law.