London-based market maker CMC Markets Plc has announced it will launch cryptocurrency contracts for difference (CFDs) and spread-betting, initially available only to its professional trading clientele. The move signals another traditional financial derivatives platform entering the crypto space, despite a tightening regulatory environment.
More Crypto CFDs Added Due to Demand
“With the cryptocurrency market growing rapidly over the past 12 months,” explained Grant Foley of CMC, “we have received significant interest from our clients for bitcoin and ethereum CFDs. As a result, we have developed a new offering for this unique digital asset class. We recognise that cryptocurrencies can be regarded as a volatile market, so we are initially only offering trading, on an exclusive basis, to our experienced professional client base.” CMC Markets, owned by Goldman Sachs, is a global market maker dealing in CFDs, foreign exchange, and spread-betting. Spread-betting, a distinctly British form of financial speculation similar to derivatives, offers flexibility in trading hours, potential for innovation, and typically includes built-in stop losses. Unlike exchange-cleared products, spread-betting is a contract directly between the client and the market maker, thereby sidestepping certain regulations. CFDs are derivatives that allow traders to take long or short positions on price without owning the underlying asset. Rivals such as Admiral Markets, Gain Capital's City Index, Plus500 Ltd., and IG Group Holdings Plc. have already proven the market's viability in crypto.
Regulators Watching Closely
CMC enters the crypto CFD space at a turbulent time. U.S. bitcoin futures have been flat, and bitcoin's price has fallen sharply in recent weeks. Last month, France's Autorite des Marches Financiers (AMF) intervened, essentially insisting that such crypto derivatives fall under the EU's MiFID II framework, which could impose strict conduct standards, mandatory reporting, and bans on electronic advertising. However, the potential rewards are evident: as Reuters reported, “Plus500 said the hype around cryptocurrencies drew more customers to its trading platforms and the company forecast 2018 revenue ‘significantly ahead’ of market expectations.” This suggests that despite regulatory headwinds, strong demand is driving traditional finance firms to offer crypto derivatives.
CMC's move provides UK professional traders with additional ways to gain exposure to cryptocurrency price movements through CFDs and spread-betting—without the need to hold the actual digital assets. Yet the high leverage and inherent volatility of cryptocurrencies mean risks remain substantial.