Regulatory Vacuum Could Delay U.S. Crypto Offerings

April 16, 2018 — 9:50 AM EDT

SEC Chairman Jay Clayton emphasized the need for early regulation during a Princeton University speech entitled "Cryptocurrency and Initial Coin Offerings."  He noted that "distributed ledger technology  has incredible promise for the financial industry" but decried the lack of adequate regulation and enforcement, warning "if we don’t stop the fraudsters, there is a serious risk that the regulatory pendulum – the regulatory actions will be so severe that they will restrict the capacity of this new security."

U.S. brokers have been hesitant to add bitcoin and other cryptocurrencies to current product offerings, worried about high volatility, lax oversight and client suitability. However, that hasn't stopped E*TRADE Financial Corporation (ETFC), Forex.Com, Just2Trade and Interactive Brokers from offering bitcoin futures through the fully regulated CME and CBOE exchanges. In addition, innovator Robinhood has rolled out bitcoin trading for California, Montana, Missouri and Massachusetts residents, telling clients that it will add more states and new coins in the future.

ChoiceTrade to Offer Crypto Trading Later This Year

Millennium BlockChain has signed a letter of intent with ChoiceTrade to take a 24% stake through common stock and warrants. The Puerto Rico-based discount broker will embark on a major expansion following the deal, partnering with cryptocurrency exchanges while upgrading tech platforms to accommodate trading in bitcoin and other digital currencies. The company currrently offers account holders commission-free trading on U.S.-listed stocks and ETFs through desktop and mobile platforms that include access to options, bonds and mutual funds.

Big Client Wants XTB to Pay Back Trading Losses

Krzysztof Kramarczyk, an active XTB customer who traded nearly 5% of the firm's 2014 retail turnover, claims that XTB intentionally throttled response times and disrupted connectivity, delaying over 220,000 trade orders. He wants compensation for $1.02 million in losses, adding to the broker's woes following a 2017 Polish Financial Supervision Authority investigation that concluded the broker "fraudulently engaged in a series of client infringements." XTB has denied Kramarczyk's charges, stating "the losses sustained by the client were solely due to the client's bad investment decisions."

GAIN Capital Enhances Risk Warning on GetGo Mobile App 

GAIN Capital Holdings, Inc. (GCAP), parent of Forex.Com and London's City Index, has added a pop-up message to its popular GetGo mobile application. Version 1.0.7 displays a warning when clients place an order that exceeds 10% of their account balance, telling them not to risk too much of their funds on a single trade. Previously, this message popped up when exposure exceeded 20%. GetGo features an algorithmic engine that looks for statistic trends in forex and other financial markets. GAIN also provides introducing broker platforms and clearing services for dozens of brokerages including Barclay's Trading Hub. 

March Trading Volume Falls at Saxo Bank

March volume fell to $317.2 billion at Saxo Bank, retreating from February's record-breaking $433.2 billion. Business is booming compared with 2017 despite the downturn, with 15.2% monthly and 20% daily increased volume in compared with March of last year. The mixed results match recent reports from Interactive Brokers Group, Gain Capital and FXCM, with many currency pairs stuck in narrow trading ranges, awaiting the impact of escalating trade tensions and Federal Reserve rate hikes.

Australia Sets May Deadline for Crypto Registration

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has set a May 14 registration deadline for approximately 100 cryptocurrency exchanges currently operating downunder. The agency has authority to police those exchanges while engaging in financial intelligence and anti-money laundering activities. Pepperstone Group, one of Australia's fastest growing forex brokers, currently offers trading in cryptocurrency derivative products bitcoin, Bitcoin Cash, Litecoin, Ethereum and Dash. Competitor AvaTrade offers commission-free trading on those instruments as well as more exotic coins Ripple, Monero, NEO, IOTA, Zcash and Qtum.