Trading 212 Crypto Ltd, a newly formed subsidiary of London-based online broker Trading 212, has received a Category 3 registration, allowing the platform to offer spot, custody, staking and card services.
The Cyprus license requires the company to comply with strict financial standards under the MiFID II framework, including segregation and protection of client funds, full transparency of business operations and capital adequacy controls.
Operating under CySEC regulation, Trading 212 can take advantage of its new regulatory conditions to expand its services to the European market. Launching services under a CySEC license will also provide users with a regulated platform for digital asset-based investments.
The Cyprus Securities and Exchange Commission (CySEC) has been attempting to strengthen regulation of cryptocurrencies and related assets by incorporating EU anti-money laundering rules into Cypriot law.
A policy statement published in 2021 outlines detailed requirements for cryptocurrency firms seeking to be listed on the regulator’s CASP register, a publicly accessible list that includes information such as a cryptocurrency firm’s name, legal form, address and services.
The policy also defines crypto assets, slightly beyond their traditional legal status.
The Cypriot regulator said that depending on their structure, crypto assets may qualify as financial instruments under the Investment Services and Activities and Regulated Markets Law. In addition, while cryptocurrencies cannot be considered legal tender, they may qualify as “electronic money” or “electronic money” under the Electronic Money Directive.
At the same time, CySEC goes beyond the requirements set out in the Fifth Directive as it wishes to include new activities not included in AMLD5 within the AML/CFT obligations.
Trading 212 is the first retail broker in the UK to offer commission-free trading, with its core product portfolio including stocks, ETFs, foreign exchange and derivatives.
In terms of CFD products, the company operated a spread revenue model from January to May 2021, earning profits from the difference between the price offered to clients and the price at which hedged transactions were entered into through back-to-back hedging agreements with group affiliates. From May 1, T2021 chose to terminate this arrangement, managing its own risk in accordance with the parameters defined for each product and asset class, and hedging its risk exposure outside of these through third parties.