The European Securities Market Authority, the supranational financial regulator in the European Union, has published a statement in which it admitted possible ban on sale and marketing of contracts for difference, whose basic asset is cryptocurrency.

The European Securities Markets Authority (ESMA) opened a public discussion of possible measures to protect the interests of investors.

“In recent years ESMA and several national competent authorities (NCAs) have observed a rapid increase in the marketing, distribution, and sale of contracts for differences, including rolling spot forex (CFDs) and binary options (BOs) to retail investors across the EU.”

Among the proposed measures it is worth noting imposing leverage limits on CFDs provided to retail clients from current 1:5 and 1:30 to 1:2 and even 1:1.

“ESMA is currently considering how CFDs on cryptocurrencies fit within the MiFID regulatory framework as financial instruments.”

Currently, retail investors are exposed to a significant risk of loss, which is magnified by the effect of high leverage, the statement reads.

Also, ESMA proposes to standardize the percentage of margin at which providers are required to close out a retail client’s open CFD.

Furthermore, ESMA proposes to restrict the marketing, distribution or sale to retail clients of CFDs.

“ESMA is currently discussing whether CFDs on cryptocurrencies, whose underlying assets have displayed very high price variation, should be addressed in the measures and whether a 5:1 initial leverage would provide investors with sufficient protection. Alternatively, a lower leverage limit (2:1 or 1:1) or stricter measures (such as a prohibition on the marketing, distribution or sale of CFDs in cryptocurrencies to retail clients) could be considered.”

Market participants are being asked to answer such questions as whether special restrictions should be imposed on cryptocurrency CFDs, and what consequences such measures as leverage limits reduction and sales ban will have.

ESMA will consider all comments received by 5 February 2018.